Conservative Options Trades

RGC:

http://finance.yahoo.com/news/portf...;_ylg=X3oDMTBhYWM1a2sxBGxhbmcDZW4tVVM-;_ylv=3

http://en.wikipedia.org/wiki/The_Hunger_Games:_Catching_Fire

http://finance.yahoo.com/news/ticke...-192014333.html;_ylt=A2KJ3CfxPpJSbiMA2beTmYlQ

http://www.youtube.com/watch?v=hmVi-GPUpy8

http://www.zacks.com/stock/quote/RGC

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

Trade:
With RGC at 19.62

Jan '14 17.50/20 bull call spread for a net debit of $180


Price..............Profit / Loss........... %
13.00.............. (180.00) .........-100.00%
15.00.............. (180.00) .........-100.00%
17.50.............. (180.00) .........-100.00%
17.80.............. (149.70) ...........-83.17%
19.30................... 0.00 ...............0.00%
20.00.................. 70.00 .............38.89%
22.00.................. 70.00 .............38.89%
22.50.................. 70.00 .............38.89%
25.00.................. 70.00 .............38.89%
 
Quote from tradingjournals:

I am very impressed by your thread, your patience and the uniqueness of your method. If I could ask, what methods do you use to search for such spreads? How do you calculate the expected values and how do you get the probs? If you have an example that goes over the steps of the numbers it would help. For instance what is the .05(195) in: Expectation = .73(110) - .22(390) - .05(195). Thanks.
More...


tj,

I think oldeneme put us all on ignore after a battle over the meaning of "conservative", so you might not get a reply...just sayin'..
 
NTE:

http://www.thestreet.com/story/1212...umbled-on-tuesday.html?puc=yahoo&cm_ven=YAHOO

http://finance.yahoo.com/news/nam-tai-electronics-inc-q3-110000253.html

http://www.thestreet.com/story/1204...-stocks-top-4-companies-tcap-sbr-nte-vgr.html

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

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

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

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

Trade
With NTE at 7.38

Jun 5/250 bull put spread for a net credit of $30
Yield = 30/220 = 13.6% in 205 days or 24.3% annualized
Prob = 77%
Expectation = .77(30) - .01(220) - .22(110) =23.1 -2.2 - 24.2 = -3.3

Price............P/L...............%
2.00 ........(220.00) .....-88.00%
2.50 ........(220.00) .....-88.00%
3.29 ........(141.40) .....-56.56%
4.70 ............0.00 ..........0.00%
4.77 ............7.00 ..........2.80%
5.00 ..........30.00 .........12.00%
6.00 ..........30.00 .........12.00%
7.00 ..........30.00 .........12.00%
9.00 ..........30.00 .........12.00%


Closing Bid/Ask on the spread is .15/.40
At the bid of $15 the expectation is very negative and you need at least $30 to get a barely acceptable expectation. Thus the market makers are not giving away anything on this spread but you can put in your bid at $30 in competition with the MM $40 and wait for another retail trader to take you up on the trade. It costs nothing to try.
 
UUP:

http://seekingalpha.com/article/185...-to-stop-stockpiling-u-s-dollars?source=yahoo

http://motherboard.vice.com/blog/china-is-quitting-the-us-dollar

http://seekingalpha.com/article/186...na-a-game-changer-for-u-s-dollar?source=yahoo

http://www.forbes.com/sites/deanpop...-talks-and-the-dollar-drops/?partner=yahootix

http://finance.yahoo.com/q/bc?s=UUP+Basic+Chart&t=2y

Trade:
With UUP at 21.70

Jan '15 23/25 bear call spread for a net credit of $22
Yield = 22/178 = 12.4% in 410 days or 11% annualized
Prob = 75%
Expectation = .75(22) - .035(178) - .215(89) = 16.5 - 6.23 - 19.14 = -9


Price..........Profit / Loss...........%
16.00 ...........22.00 ...........11.00%
19.00 ...........22.00 ...........11.00%
22.00 ...........22.00 ...........11.00%
23.00 ...........22.00 ...........11.00%
23.22 .............0.00 ............0.00%
25.00 .........(178.00) ........-89.00%
26.00 .........(178.00) ........-89.00%
28.00 .........(178.00) ........-89.00%
30.00 .........(178.00) ....... -89.00%
 
SEM:

http://finance.yahoo.com/news/select-medical-downgraded-strong-sell-191002052.html

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

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

http://finance.yahoo.com/q/bc?s=SEM&t=1y&l=on&z=l&q=l&c=

Trade:
with SEM at 8.50
Trade #1
Jun '14 10/12.50 bear call spread for a net credit of $30
Yield = 30/220 = 13.6% in 200 days or 24.9% annualized
Prob = 75%
Expectation = .75(30) - .08(220) - .17(110) = 22.5 - 17.6 - 18.7 = -14


Trade #2
Jun '14 7.50/5.00 bull put spread for a net credit of $40
Yield = 40/210 = 19% in 200 days or 35% annualized
Prob = 66%
Expectation = .66(40) - .05(215) - .29(108) = 26.4 - 10.75 - 31.3 = -16

No preference
 
FCG:

http://finance.yahoo.com/news/natural-gas-etf-warms-cool-222206453.html

http://finance.yahoo.com/q/hl?s=FCG+Holdings

http://www.almanac.com/content/almanacs-long-range-weather-forecast-us-and-canada

http://finance.yahoo.com/q/bc?s=FCG&t=1y&l=on&z=l&q=l&c=

Trade:
With FCG at 19.61

Jan '14 15/20 bull call spread for a net debit of $428


Price........Profit / Loss.......... %.....
10.00 ........(428.00) .......-100.00%
13.00 ........(428.00) .......-100.00%
15.00 ........(428.00) .......-100.00%
16.67 ........(261.30) .......-61.05%
19.28 ...........0.00 ...........0.00%
19.44 ...........16.40 .........3.83%
20.00 ...........72.00 ........16.82%
22.00 ...........72.00 ........16.82%
25.00 ...........72.00 ........16.82%

Potential Yield = 72/428 = 16.8% in 43 days or 143% annualized
 
YUM:
http://finance.yahoo.com/news/yum-falls-muted-outlook-204503551.html

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

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

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

Trade:
With YUM at 75.66

Jan '15 85/90 Bear call spread for a net credit of $115
Yield = 115/385 = 29.9% in 407 days or 26.8% annualized
Prob = 71%
Expectation = .71(115) - .21(385) - .08(192) = 81.65 - 80.85 - 15 = -14


Price.............Profit / Loss...........%
70.00 ..............115.00 ..........23.00%
75.00 ..............115.00 ..........23.00%
80.00 ..............115.00 ..........23.00%
85.00 ..............115.00 ..........23.00%
86.15 ..................0.00 ...........0.00%
89.97 ................(382.30) .....-76.46%
90.00 ................(385.00) .....-77.00%
95.00 ................(385.00) .....-77.00%
100.00 ..............(385.00) .....-77.00%
 
Quote from oldnemesis:

YUM:
http://finance.yahoo.com/news/yum-falls-muted-outlook-204503551.html

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

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

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

Trade:
With YUM at 75.66

Jan '15 85/90 Bear call spread for a net credit of $115
Yield = 115/385 = 29.9% in 407 days or 26.8% annualized
Prob = 71%
Expectation = .71(115) - .21(385) - .08(192) = 81.65 - 80.85 - 15 = -14


Price.............Profit / Loss...........%
70.00 ..............115.00 ..........23.00%
75.00 ..............115.00 ..........23.00%
80.00 ..............115.00 ..........23.00%
85.00 ..............115.00 ..........23.00%
86.15 ..................0.00 ...........0.00%
89.97 ................(382.30) .....-76.46%
90.00 ................(385.00) .....-77.00%
95.00 ................(385.00) .....-77.00%
100.00 ..............(385.00) .....-77.00%
More...

Why not sell the 55/60 put spread as well? You're getting 0.90 at the bid and three handles in vol over the ATM.
 
"Why not sell the 55/60 put spread as well? You're getting 0.90 at the bid and three handles in vol over the ATM."

I consider YUM as over bought (because of its high PE relative to competitors) and the market in general as over extended.

Thus I have a bearish bias toward YUM.

This is a very long term trade and I might consider selling the bull put spread at some later date.

http://finance.yahoo.com/q/co?s=YUM+Competitors
 
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