Conservative Options Trades

ISRG:

http://finance.yahoo.com/news/intuitive-surgical-climbs-da-vinci-194625742.html

http://finance.yahoo.com/news/fda-clears-intuitive-surgicals-da-181025593.html

http://blogs.barrons.com/stockstowatchtoday/2014/04/02/32404/?mod=yahoobarrons&ru=yahoo

http://www.youtube.com/watch?v=VJ_3GJNz4fg

http://www.cnbc.com/id/100650872

http://stockcharts.com/h-sc/ui?s=isrg

Trade:
With ISRG at 518.50
Jan '15 440/450 bull call spread for a net debit of $760
Yield = 240/760 = 31.6% in 289 days or 40% annualized
Prob and Expectation calcs are meaningless


Price..............................Profit / Loss...................ROI %
350.00........................... (760.00)................... -100.00%
400.00........................... (760.00).................... -100.00%
440.00........................... (760.00)..................... -100.00%
447.60................................... 0.00.............................. 0.00%
450.00.............................. 240.00.......................... 31.58%
500.00.............................. 240.00.......................... 31.58%
518.50.............................. 240.00.......................... 31.58%
575.00............................. 240.00........................... 31.58%
600.00............................. 240.00........................... 31.58%
 
ZEUS:

http://finance.yahoo.com/news/bear-day-olympic-steel-zeus-050033352.html

http://finance.yahoo.com/q/ks?s=ZEUS+Key+Statistics

http://investing.money.msn.com/investments/financial-statements?symbol=ZEUS

http://finance.yahoo.com/q/bc?s=ZEUS&t=2y&l=off&z=l&q=l&c=

Trade:
With Zeus at 29.37
Jul 30/25 bear put spread for a net debit of $205
Yield = 295/205 = 144%

Price.............................Profit / Loss.........................ROI %
18.75.............................. 295.00............................ 143.90%
22.35.............................. 295.00............................ 143.90%
25.00.............................. 295.00............................ 143.90%
26.14.............................. 181.40................................ 88.49%
27.95.................................... 0.00................................... 0.00%
29.92............................. (197.40)............................ -96.29%
30.00............................. (205.00..........................) -100.00%
33.71............................. (205.00).......................... -100.00%
37.50............................. (205.00).......................... -100.00%
 
K:

http://stockcharts.com/h-sc/ui?s=K

http://www.usatoday.com/story/money/business/2014/04/04/kellogg-stock-trade-takeover/7328005/

http://finance.yahoo.com/news/kellogg-company-k-focus-stock-111111975.html

http://www.bloomberg.com/news/2014-...the-most-in-almost-five-years.html?cmpid=yhoo

http://finance.yahoo.com/q/ks?s=K+Key+Statistics

http://finance.yahoo.com/q/bc?s=K&t=2y&l=off&z=l&q=l&c=


With K at 63.77
Trade: #1
Jan '15 57.5/55 bull put spread for a net credit of $35
Yield = 35/215 = 16.3% in 285 days or 21% annualized

Trade #2
Sept '14 62.5 straddle for a net debit of $595

Price.....................................Spread.................Straddle
45.00................................... (215.00)..............1000.00
50.00................................... (215.00)..................635.00
55.00................................... (215.00)..................138.00
56.40...................................... (74.80).....................15.00
56.55........................................(35.00).........................0.00
57.15........................................... 0.00.......................(60.00)
57.50......................................... 35.00......................(94.00)
63.77..........................................35.00....................(465.00)
65.00......................................... 35.00....................(333.00)
70.00......................................... 35.00...................$164.00
80.00......................................... 35.00.................$1100.00
 
Portfolio allocation:

http://stockcharts.com/h-sc/ui?s=spy

On Friday The S&P dropped by about 2.5% while BND and TLT advanced by about .5%

http://finance.yahoo.com/q/bc?t=1d&s=BND&l=on&z=l&q=l&c=TLT&ql=1&c=^GSPC

According to a common bond/equity allocation scheme

http://money.cnn.com/retirement/guide/investing_basics.moneymag/index7.htm


You should keep (100 - age)% of your investment portfolio in bonds or bond like securities.


In order to come out even on the day I would need to have

2.5/.5 = 5 times as much in bonds as in equities.... i.e. 17% in equities and 83% in bonds.

i.e. 83 year olds would have been even on the day.


:-)
 
PFE:

http://stockcharts.com/h-sc/ui?s=pfe

http://news.investors.com/040714-69...ntation.htm?ven=yahoocp&src=aurlled&ven=yahoo

http://www.theflyonthewall.com/perm...6/PFE-Pfizer-selloff-unwarranted-Barrons-says

http://finance.yahoo.com/q/ks?s=PFE+Key+Statistics

http://investing.money.msn.com/investments/financial-statements?symbol=PFE

http://finance.yahoo.com/q/bc?s=PFE&t=2y&l=off&z=l&q=l&c=

Phase II trials are not meant to be statistically significant trials but are used as a chance for the company to dip its toe into the clinical trial arena for this drug. This allows them to build machinery and test procedures which then enable them to conduct the more definitive phase III trial.

The Phase III trial is where the emphasis is on a larger population and statistically significant results.

BTW drugs HAVE been approved where statistical significance has not been obtained and where the disease is dread and the treatment hopeful.

Pfizer as a company is much much more than palbociclib.

Trade:
with PFE at 31.20
Dec 25/20 bull put spread for a net credit of $32
Yield = 32/468 = 6.8% in 256 days or 9.8% annualized
Prob = 85%
Expectation = .85(32) - .02(468) - .13(234) = 27.2 - 9.36 - 30.42 = -13
BE @ 24.68
 
Pfizer is located on 42nd street in Manhattan:

https://www.google.com/maps/@40.750...ata=!3m4!1e1!3m2!1s9CUf4JG_8hmPcawqgSWc_Q!2e0

I used to work for them there as a consultant on clinical trials.

I remember most the stand-up deli's where I used to grab lunch on the fly. It's where I got addicted to Reuben sandwiches.

200px-Corn_beef_Reuben_sandwich.jpg
 
oldnemesis said:
ISRG:

http://finance.yahoo.com/news/intuitive-surgical-climbs-da-vinci-194625742.html


Trade:
With ISRG at 518.50
Jan '15 440/450 bull call spread for a net debit of $760
Yield = 240/760 = 31.6% in 289 days or 40% annualized
Prob and Expectation calcs are meaningless


Price..............................Profit / Loss...................ROI %
350.00........................... (760.00)..................... -100.00%
400.00........................... (760.00)..................... -100.00%
440.00........................... (760.00)...................... -100.00%
447.60................................... 0.00.............................. 0.00%
450.00.............................. 240.00.......................... 31.58%
500.00.............................. 240.00.......................... 31.58%
518.50.............................. 240.00.......................... 31.58%
575.00............................. 240.00........................... 31.58%
600.00............................. 240.00........................... 31.58%
More...

http://stockcharts.com/h-sc/ui?s=isrg

http://finance.yahoo.com/news/intuitive-surgical-slumps-weak-1q-155804025.html

Trade:
With ISRG at 456.64
Jan 500/510 bear call spread for a net credit of $200

Price...........................Profit / Loss..............ROI %
350.00........................... 200.00................. 20.00%
400.00........................... 200.00................. 20.00%
450.00........................... 200.00................. 20.00%
500.00........................... 200.00.................. 20.00%
502.00................................ 0.00..................... 0.00%
510.00......................... (800.00)................ -80.00%
520.00......................... (800.00)................ -80.00%
530.00......................... (800.00)................. -80.00%
550.00......................... (800.00)................. -80.00%

Would the additional trade mitigate or guarantee a loss??
 
oldnemesis said:
Using options to raise yields on income instruments:

TLT:
http://finance.yahoo.com/q/bc?t=5y&s=TLT&l=off&z=l&q=l&c=&ql=1
TLT currently yields 3.06% annually in dividends.
With TLT at 109.89

Sept 100/95 bull put spread for a net credit of $35
Yield = 35/465 = 7.5% in 163 days or 16.8% annualized.
Prob = 93%
Expectation = .93(35) - .02(465) - .05(232) = 32.55 - 9.3 - 11.6 = 11.6
More...

so are you saying 2% of the time you can have a max loss, and 5% of the time you successfully exit early?
 
JNJ:

http://www.forbes.com/sites/greatsp...-pick-in-a-dangerous-market/?partner=yahootix

JNJ yields 2.7% annually in dividends.

http://finance.yahoo.com/q/ks?s=JNJ+Key+Statistics

http://investing.money.msn.com/investments/financial-statements?symbol=jnj

http://finance.yahoo.com/q/bc?t=5y&s=JNJ&l=off&z=l&q=l&c=&ql=1

http://stockcharts.com/h-sc/ui?s=jnj

Trade:

Oct 80/75 bull put spread for a net credit of $28
Yield = 28/472 = 5.93% in 189 days or 11.5% annualized
Prob = 95%
Expectation = .95(28) - .01(472) - .04(236) = 26.6 - 4.72 - 9.44 = 12.44
 
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