My Options Play
- Thread starter Multioption
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I was contracted to deviate from the thread purpose and expose underlying price movement. Local #111
An advice to Multioption:
There is no need to say this because you already know that but don't be under pressure to do a trade if you don't feel like it. Just wait. Trading is like fishing, sometimes you have to wait for a long time. Many people lose money because they trade a lot !!. You are doing a superb job. I don't do your trades but I like to know how the other traders do. After your loss in BBY you have become more cautious that makes complete sense.
There is no need to say this because you already know that but don't be under pressure to do a trade if you don't feel like it. Just wait. Trading is like fishing, sometimes you have to wait for a long time. Many people lose money because they trade a lot !!. You are doing a superb job. I don't do your trades but I like to know how the other traders do. After your loss in BBY you have become more cautious that makes complete sense.
A rather safe trade for less than 3 weeks time frame with about 20% gain !!
I am heavily invested in XLNX, TXN , and INTC options and don't have more money to trade more but I will do it for 5 contracts tomorrow. I am doing this on XLNX because I am following the stock and I think I know its pattern and I feel that it has bottomed and there is a good chance that it might hit 25 by November option expiry date. Now the stock is at about 23.50.
The trade is to buy CALL 20 and sell Call 22.5. Both in the money. The ideal case will be the stock stays above 22.5 on option expiry date. Anything above 22.5 will take us to the safe side but will not increase the profit.
BID/ASK for Call 20 is 340/370 Last 3.50
BID/ASK for Call 22.5 is 1.39/1.45. Last 1.35
Put a multi leg order with 1/1 ratio with a debit of 2.1. You will get 40 cents in 3 weeks which is about 20%. You will start to lose money if the stock goes below 22.1. Tell me what you think about this. You can play the same strategy on your own favorite stock if you are not comfortable with XLNX.
I am heavily invested in XLNX, TXN , and INTC options and don't have more money to trade more but I will do it for 5 contracts tomorrow. I am doing this on XLNX because I am following the stock and I think I know its pattern and I feel that it has bottomed and there is a good chance that it might hit 25 by November option expiry date. Now the stock is at about 23.50.
The trade is to buy CALL 20 and sell Call 22.5. Both in the money. The ideal case will be the stock stays above 22.5 on option expiry date. Anything above 22.5 will take us to the safe side but will not increase the profit.
BID/ASK for Call 20 is 340/370 Last 3.50
BID/ASK for Call 22.5 is 1.39/1.45. Last 1.35
Put a multi leg order with 1/1 ratio with a debit of 2.1. You will get 40 cents in 3 weeks which is about 20%. You will start to lose money if the stock goes below 22.1. Tell me what you think about this. You can play the same strategy on your own favorite stock if you are not comfortable with XLNX.
If you feel really confident about XLNX hitting 25 before expiry, just buy XLNX Nov 20 calls, or even Nov 22.5 calls. Much better reward. Your 40 cents profit doing spread would get eaten up by at least one half due to the bid/ask spread.
XLNX was trading around 28 till they came up with a warning 3 weeks ago and their stock tumbled about 20% and then their result came out 10 days ago and their result was pretty good and the warning was actually nothing. I have 62 contracts naked PUT 25 for Jan 2006 and I am also selling Call 27.5 for December to match the contracts. You see that I am heavily into XLNX so I don't want to increase the risk and want to do a safer trade. When I put that multi leg order, I don'tcare how much I buy each leg, I just pay them $2.1. I also pay 0.75 for each contract and if both legs get excercised on option expiry date, I don't pay any commission for option excercise . My broker is IB. So I will get $40-1.5=$38.5 for each $210 I invest.
XLNX was trading around 28 till they came up with a warning 3 weeks ago and their stock tumbled about 20% and then their result came out 10 days ago and their result was pretty good and the warning was actually nothing. I have 62 contracts naked PUT 25 for Jan 2006 and I am also selling Call 27.5 for December to match the contracts. You see that I am heavily into XLNX so I don't want to increase the risk and want to do a safer trade. When I put that multi leg order, I don'tcare how much I buy each leg, I just pay them $2.1. I also pay 0.75 for each contract and if both legs get excercised on option expiry date, I don't pay any commission for option excercise . My broker is IB. So I will get $40-1.5=$38.5 for each $210 I invest.
And of course the near disaster with PEET, which leaves just one clear winner (CHS) in a month. During any month options, both calls and puts, on major stocks are making 100% + gains on a regular basis. AAPL, DIA, FDG, GOOG, DELL, BBH, etc.
Multi claims to have some sort of system working for him, but after a month the results have been the sh!ts.
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