Conservative Options Trades

SGG:

http://www.businessweek.com/news/20...rt-profits-beat-domestic-sales-on-crop-delays

http://www.brecorder.com/component/...-sees-sugar-exports-rise-25pc-in-2012-13.html

http://www.bworldonline.com/content...arginal-increase-in-sugar-production&id=53328

http://www.abc.net.au/news/2012-06-12/sugar-mill-expecting-bigger-crush/4065726

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

August 70/75 and 70/80 Bull Call Spreads and 75/70 bull put spread

....................................P/L...................................
SGG...........70/75 .........70/80.............75/70
65...............(440)..........(615).............(415)
70...............(440)..........(615).............(415)
75.................60.............(114)...............85
80.................60..............385.................85
85.................60..............385.................85

It's been interesting but I'm not doing any SGG trades this year... maybe next year.
 
BDX:
k4452937.jpg


http://finance.yahoo.com/news/becton-beats-rev-est-tweaks-181530011.html

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

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

http://finance.yahoo.com/q/bc?t=5y&s=BDX&l=on&z=l&q=l&c=&ql=1&c=^GSPC

http://finance.yahoo.com/q/bc?s=BDX&t=5y&l=on&z=l&q=l&c=

Trade:

Dec 60/55 bull put spread for $37
Yield = 37/463 = .0799 = 8% in 191 days or 15.3% annualized
Prob = 93%
Expectation = .93(37) - .02(463) - .05(231) = 34.4 - 9.3- 11.6 = 13.5
 
Today is the last day to hedge my portfolio before the weekend elections in Europe:

http://articles.marketwatch.com/2012-06-14/commentary/32226281_1_tsipras-euro-crisis-bailout-terms

http://www.cnn.com/2012/06/14/world/weekend-world-elections/index.html

The most direct hedge is to buy puts against each long position but that is complex and expensive. Another way to create a hedge is to go long an inverse ETF like SH:

http://finance.yahoo.com/q/bc?t=5y&l=on&z=l&q=l&p=&a=&c=^GSPC&s=sh&ql=1

I prefer to 'go long' by buying short term, in the money calls on SH rather then buying puts on each position or buying SH stock straight out.

e.g. buying ATM AUG SH calls (at 1.60) and then computing an approximate value of the S&P (SPY) corresponding to the SH value:

With SPY at 133.47 and SH at 37.46 buy the AUG 37 SH call:

At Aug expiration


SPY...............SPY%.........SH.........SH Calls P/L......SH Calls P/L%
142.23.........6.0%..........35...............(160).............(100%)
124.40........(6.7%).........40................140..................88%
106.60........(20%)..........45................640................400%
...88.80.......(33%)..........50..............1140................700%

So if I buy 1 SH call and SPY drops from 133.47 to 124.40 (6.7%) I would expect the SH call to rise from $160 to $300 and provide a $140 profit or 88%, providing a 13 times leverage in the hedge. Thus a $100k portfolio would require 100K/13 = $7700 to hedge buying the AUG SH calls. Not Cheap... I can sell them immediately after the elections to reduce this cost considerably. If I get 60% back on Monday my hedge will have cost me .4(7700) = 3080 or 3.1%. Another cheap-out is to substitute a spread for the straight calls which could save another 10% or so but raise complexity.

Not cheap... but if the market drops like a stone I'll be happy as a pig in sh*t.
 
 
UNH:
http://finance.yahoo.com/news/unitedhealth-group-unh-050002180.html
http://www.foxbusiness.com/industri...health-lifts-dividend-announces-buyback-plan/
http://finance.yahoo.com/news/unitedhealthcare-voluntarily-extends-important-health-110000018.html
http://www.forbes.com/sites/dividen...way-from-unitedhealth-group/?partner=yahootix
http://www.thestreet.com/story/1158...on-reiterated-unh.html?puc=yahoo&cm_ven=YAHOO
http://finance.yahoo.com/q/ks?s=UNH+Key+Statistics
http://investing.money.msn.com/investments/financial-statements?symbol=unh
http://finance.yahoo.com/q/bc?s=UNH&t=5y&l=on&z=l&q=l&c=
http://finance.yahoo.com/q/bc?s=UNH&t=1y&l=on&z=l&q=l&c=

Trade:
Sept 45/40 bull put spread for $20
Yield = 20/480 = 4.2% in 92 days or 16.5% annualized
Prob = 95%
Expectation = .95(20) - .01(480) - .04(240) = 19 - 4.8 - 9.6 = 4.6
 
ACI:
http://finance.yahoo.com/news/arch-coal-laying-off-750-214108027.html
http://finance.yahoo.com/q/ks?s=ACI+Key+Statistics
http://investing.money.msn.com/investments/financial-statements?symbol=ACI
http://finance.yahoo.com/q/bc?s=ACI&t=5y&l=on&z=l&q=l&c=

Trade:
Jan '13 10/12.5 bear call spread for $15
Yield = 15/235 = 6.38% in 210 days or 11.1% annualized
Prob = 86%
Expectation = .86(15) - .06(235) - .08(117) = 12.9 - 14.1 - 9.4 = -10.6

Trade2:
Jan '14 10/12.5 bear call spread for $36
Yield = 36/164 = 21.9% in 574 days or 13.9% annualized
Prob = 83%
Expectation = .83(36) - .125(164) - .045(82) = 29.9 - 20.5 - 3.7 = 5.7

http://www.youtube.com/watch?v=bTdDTTzX8B0&feature=related
http://www.youtube.com/watch?v=4ZEHJzIJ9hs
http://www.youtube.com/watch?feature=endscreen&v=BqWfyAfaFZI&NR=1
 
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