Conservative Options Trades

 
 
DD:

http://finance.yahoo.com/news/dupont-cuts-profit-forecast-corn-204014461.html

http://blogs.barrons.com/stockstowa...he-soybeans-did-it/?mod=yahoobarrons&ru=yahoo

http://finance.yahoo.com/news/dupont-cuts-earnings-view-weak-162512827.html

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

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

http://finance.yahoo.com/q/bc?t=2y&s=DD&l=on&z=l&q=l&c=&ql=1

Trade 1:
with DD at 65.44
Jan '15 72.5/77.5 bear call spread for a net credit of $40
Yield = 40/460 = 8.7% in 203 days or 15.6% annualized
prob = 82%
Expectation = .82(40) - .07(460) - .11(230) = 32.8 - 32.2 - 25.3 = -25
(requires downside follow-through on Monday)

Trade 2 :

Jan '15 55/50 bull put spread for a net credit of $31
Yield = 31/469 = 6.6% in 203 days or 11.9%
Prob = 93%
Expectation = .93(31) - .01(469) - .06(235) = 28.83 - 4.69 - 14.1 = 10.0
 
OC:

http://finance.yahoo.com/news/weak-roof-business-dims-owens-144519232.html

http://finance.yahoo.com/news/owens-corning-strong-sell-dampened-214009756.html

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

http://finance.yahoo.com/q/bc?t=2y&s=OC&l=off&z=l&q=l&c=&ql=1&c=^GSPC

http://finance.yahoo.com/q/bc?t=2y&s=OC&l=off&z=l&q=l&c=&ql=1

Trade:
with OC at 38.68
Jan '15 46/50 bear call spread for a net credit of $40
Yield = 40/360 = 11.1% in 199 days or 20.4% annualized
Prob = 83%
Expectation = .83(40) - .08(360) - .09(180) = 33.2 - 28.8 - 16.2 = -11.8
 
 
SO:

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

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

With SO at 44.01
Jan '15 40/35 bull put spread for a net credit of $50
Yield = 50/450 = 11.1% in 195 days or 20.8% annualized
Prob = 81%
Expectation = .81(50) - .02(450) - .17(225) = 40.5 - 9 - 38.25 = -6.75
Compare one option contract to buying equivalent $ in stock at $44.01 (10.11 shares)
so that investment in both cases is $450
Spread..............................................................Stock....................................
Price................. Profit / Loss............... ROM % .................P/L................ROM%
26.25 .................(450.00)................. -90.00% .............(181.15)..........(40.0%)
31.77................. (450.00)................. -90.00%..............(124.84)..........(27.7%)
35.00 .................(450.00)................. -90.00% ...............(92.08)..........(20.5%)
37.58................... (191.90)................ -38.38%...............(65.71)...........(14.6%)
39.50........................ 0.00..................... 0.00%..............(46.09)............(10.1%)
40.00...................... 50.00................... 11.10%...............(40.09).............(8.9%)
43.39...................... 50.00.................... 11.10%...............(6.34)..............(1.4%)
49.20...................... 50.00.................... 11.10%...............53.04...............11.7%
55.01...................... 50.00.................... 11.10%..............112.42..............24.9%
 
LIT:

http://www.investing.com/analysis/battery-powered-profits-—-courtesy-of-tesla-218611

http://finance.yahoo.com/q/pr?s=LIT+Profile

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

Trade:
with LIT at 13.81
Sell Jan '15 $112 put for a net credit of $140
Yield = 140/1060 = 13.2% in 194 days or 24.8% annualized
Prob = 75%


Price..............Profit / Loss...........ROM %
8.00.................(260.20)...........-24.50%
9.00................ (160.00).......... -13.33%
10.00.................. (1.40)............ -0.12%
10.60................... 0.00............... 0.00%
12.00................ 140.00............. 13.20%
13.00................ 140.00............. 13.20%
14.00................ 140.00..............13.20%
 
 
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