Conservative Options Trades

TAP:

http://finance.yahoo.com/news/3-reasons-grab-ice-cold-221310347.html

http://www.thestreet.com/story/1319...analyst-downgrade.html?puc=yahoo&cm_ven=YAHOO

http://www.msn.com/en-us/money/stockdetails/fi-126.1.TAP.NYS?symbol=TAP&form=PRFIEQ

http://finance.yahoo.com/echarts?s=TAP+Interactive#{"range":"2y","allowChartStacking":true}

Trade:
With TAP at 71.65
Jan 55/53.5 bull put spread for a net credit of $35
Yield = 35/215 = 16.3% in 180 days or 33% annualized
Prob = 90%
Expectation = .9(35) - .06(215) - .04(108) = 31.5 -12.9 - 4.3 = 14.3

Price............... Profit / Loss......... ROM %
45.00.................. (215.00)........... -83.70%
50.00.................. (215.00)........... -83.70%
52.50.................. (215.00)........... -83.70%
54.65....................... 0.00............... 0.00%
55.00...................... 35.00............. 16.30%
60.00...................... 35.00............. 16.30%
65.00...................... 35.00............. 16.30%
70.00...................... 35.00............. 16.30%
75.00...................... 35.00............. 16.30%
 
IRBT:

http://finance.yahoo.com/news/irobot-beats-street-2q-forecasts-202746912.html

http://finance.yahoo.com/news/irobot-second-quarter-financial-results-200100571.html

http://www.msn.com/en-us/money/stockdetails/fi-126.1.IRBT.NAS?symbol=IRBT&form=PRFIEQ

http://finance.yahoo.com/echarts?s=IRBT+Interactive#{"range":"2y","allowChartStacking":true}

Trade:
With IRBT at 31.42
Jan '17 25/20 bull put spread for a net credit of $150
Yield = 150/350 = 42.8% in 548 days or 28.5% annualized

Price............... Profit / Loss........... ROM %
15.00.................. (350.00)............. -57.2%
18.00.................. (350.00)............. -57.20%
20.00.................. (350.00)............. -57.20%
23.50....................... 0.00................. 0.00%
24.56.................... 106.30............... 21.26%
25.00.................... 150.00............... 42.80%
30.00.................... 150.00............... 42.80%
35.00.................... 150.00............... 42.80%
40.00.................... 150.00............... 42.80%

http://www.irobot.com/
 
Comparing the P/L table for the above trade to buying the stock at $31.42

Price............... Profit / Loss........... ROM %..........Stock........Stock %
15.00.................. (350.00)............. -57.2%.........(1642.00)........(52.2%)
18.00.................. (350.00)............. -57.20%........(1364.00).......(43.4%)
20.00.................. (350.00)............. -57.20%........(1164.00).......(37.0%)
23.50....................... 0.00................. 0.00%............(792.00)..........(25.2%)
24.56.................... 106.30............... 21.26%..........(686.00).........(21.8%)
25.00.................... 150.00............... 42.80%..........(642.00).........(20.4%)
30.00.................... 150.00............... 42.80%..........(142.00)...........(4.5%)
31.42.....................150.00................42.80%...............0.00..............(0.0%)
35.00.................... 150.00............... 42.80%...........358.00...............11.4%
40.00.................... 150.00............... 42.80%...........758.00...............24.1%
 
yes it is lower. But this is a long trade (548 days) and I am really comparing it to buying the stock. As the time frame gets longer the usefulness of the probability calculations is much less.

This trade is like buying the stock but with much better parameters.

Also it remains to be seen if I can get a fill within these numbers.
 
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KMB:

http://finance.yahoo.com/news/kimberly-clark-beats-q2-earnings-184006322.html

http://www.fool.com/investing/gener...lark-beats-wall-streets-earnings-estimat.aspx

http://www.msn.com/en-us/money/stockdetails/fi-126.1.KMB.NYS?symbol=KMB&form=PRFIEQ

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

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

Trade:
With KMB at 111.63
Sept 105/100 bull put spread for a net credit of $40
Yield = 40/460 = 8.7% in 57 days or 56% annualized
Prob = 81%
Expectation = .81(40) - .06(460) - .13(230) = 32.4 - 27.6 - 29.9 = -25.1

Price............... Profit / Loss.......... ROM %
75.00.................. (460.00)............ -92.00%
90.00.................. (460.00)............ -92.00%
100.00................ (460.00)............ -92.00%
100.42................ (417.60)............ -83.52%
104.60..................... 0.00................ 0.00%
105.00................... 40.00................ 8.70%
113.46.................. 40.00................. 8.70%
120.00.................. 40.00................. 8.70%
140.00.................. 40.00................. 8.70%

Alternate Trade:
Sept 115/120 bear call spread for a net credit of $55
Yield = 55/445 = 12.4% in 57 days or 79% annualized
Prob = 67%
Expectation = .67(55) - .15(445) - .18(223) = 36.85 - 66.75 - 40.14 =-173.64

Price................. Profit / Loss.......... ROM %
85.00.................... 55.00................. 12.40%
95.00.................... 55.00................. 12.40%
110.00.................. 55.00................. 12.40%
115.00.................. 55.00................. 12.40%
115.55................... 0.00.................... 0.00%
120.00.............. (445.00)............... -87.60%
125.00.............. (445.00)............... -87.60%
130.00.............. (445.00)............... -87.60%
150.00.............. (445.00)............... -87.60%

Option pricing does not favor either one of these trades. The chart and my view that the market is overbought makes me favor the bear call spread. I may take the bear call spread purely on the basis of the chart and the P/E, even though the options are not fairly priced. I'll try to get $60 or $65 for the spread.
 
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NWN;

http://finance.yahoo.com/echarts?s=NWN+Interactive#{"range":"5y","allowChartStacking":true}

http://www.msn.com/en-us/money/stockdetails/fi-126.1.NWN.NYS?symbol=NWN&form=PRFIEQ

Trade:
With NWN at 42.47

Dec 40/35 bull put spread for a net credit of $75
Yield = 75/425 = 17.6% in 146 days or 44% annualized
Prob = 70.4%
Expectation = .70(75) - .04(425) - .26(218) = 52.5 - 17.0 - 56.7 = -21

Price............. Profit / Loss.............. ROM %
25.00.............. (425.00)................. -85.00%
30.00.............. (425.00)................. -85.00%
35.00.............. (425.00)................. -85.00%
36.82.............. (242.80)................. -48.56%
39.25................... 0.00..................... 0.00%
40.00................. 75.00.................... 17.60%
42.00................. 75.00.................... 17.60%
45.00................. 75.00.................... 17.60%
50.00................. 75.00.................... 17.60%
 
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