Option trade idea on YHOO

[hajimow]

It is obvious that YHOO is in uptrend. Here is my trade idea which has low risk and has the potential of more than doubling your money in 4 weeks.

First leg:
Sell 15/14 PUT Spread for July for credit of about 15 cents. Sell 15 PUT and buy 14 PUT.

Second Leg:
Buy 15/16 CALL spread for July for debit of about 0.62. (Buy Call 15 and sell Call 16).

Money paid for one contract of this leg: 0.62-0.15=0.47
Max profit : 0.53 minuts commission.

Put a stop loss if YHOO hits 14.70 (possibility is very low).
Close position if you make 80% before expiry.

 

[newwurldmn]

Why not just buy stock and buy some puts. Why trade four legs?

I've been doing okay just selling 15 strike puts in YHOO every month.

 

[hajimow]

Quote from newwurldmn:

Why not just buy stock and buy some puts. Why trade four legs?

I've been doing okay just selling 15 strike puts in YHOO every month.

I did not want to recommend selling naked PUT (although I am also doing that) because I wanted to propose a protected trade.
Have you calculated the margin comparison between your idea dn my idea? potential gain/loss?
It is great to hear that you are still trading YHOO. 85% of my account is on YHOO stock and options and I am doing great.

 

[newwurldmn]

Quote from hajimow:

I did not want to recommend selling naked PUT (although I am also doing that) because I wanted to propose a protected trade.
Have you calculated the margin comparison between your idea dn my idea? potential gain/loss?
It is great to hear that you are still trading YHOO. 85% of my account is on YHOO stock and options and I am doing great.

I'm not that big. (no position is) but yhoo is consistent with my other sizes.

Margin on the YHOO put will be approx $3. Your thingy will be the premium. But they have different distributions. Do you really think YHOO will either be 10 or 20 by july?
More likely it will be between 14 and 16. In which case the put is a better trade.
I sell the put because I don't see the upside in YHOO and I tihnk it's floored at 12. So my downside is $3 and my upside is how many times i can jump infront of that car.

 

[hajimow]

Quote from newwurldmn:

I'm not that big. (no position is) but yhoo is consistent with my other sizes.

Margin on the YHOO put will be approx $3. Your thingy will be the premium. But they have different distributions. Do you really think YHOO will either be 10 or 20 by july?
More likely it will be between 14 and 16. In which case the put is a better trade.
I sell the put because I don't see the upside in YHOO and I tihnk it's floored at 12. So my downside is $3 and my upside is how many times i can jump infront of that car.

My trade idea shows that I believe YHOO will be a little over $16 and I don't expect it go anywhere near 10 ot 20.
Throwing yourself in front of the car was a good analogy.

 

[hajimow]

S&P is down 1.6% and YHOO is down 0.9%. I see a short term relative strength in YHOO. Watch for a pop in the next few days if the market allows.

 

[diaoptions]

Quote from hajimow:

It is obvious that YHOO is in uptrend.

Are you sure it's YHOO you are watching? I don't see an uptrend. But it does look like it's going to break through support or resistance soon.

 

[hajimow]

Quote from diaoptions:

Are you sure it's YHOO you are watching? I don't see an uptrend. But it does look like it's going to break through support or resistance soon.

It closed at 15.74 yesterday. Lets' take just now's price which is 15.51. 10, 50, and 200 day moving averages are 15.48, 15.35, and 15.34 which the current price is above those 3 moving averages and yes I still say YHOO is in uptrend.

 

[Whistlingleaf]

hajimow I thought you were a rebate trader with like a 7 digit account ? you say 85% of your account is in one position ?

I LOVE Yahoo Finance - I even think YHOO should go up after recent news -

I forgot how much $$$ they're getting and how much their remaining stake is worth, and I forget how much of a buyback they said they're doing, but the stock never seems to go up !

I have some stock in the IRA and have stabbed at near term calls a few times, but never got paid off.

30 cents of premium on the 15 puts for July (<2%) doesn't seem like enough reward given external factors which could tank the market at any time.

Buying an Oct/J 13/ J 14 bull call spread at 15-18/90/20 is what I'd consider ~

 

[hajimow]

Quote from Whistlingleaf:

hajimow I thought you were a rebate trader with like a 7 digit account ? you say 85% of your account is in one position ?

I LOVE Yahoo Finance - I even think YHOO should go up after recent news -

I forgot how much $$$ they're getting and how much their remaining stake is worth, and I forget how much of a buyback they said they're doing, but the stock never seems to go up !

I have some stock in the IRA and have stabbed at near term calls a few times, but never got paid off.

30 cents of premium on the 15 puts for July (<2%) doesn't seem like enough reward given external factors which could tank the market at any time.

Buying an Oct/J 13/ J 14 bull call spread at 15-18/90/20 is what I'd consider ~

Yes my account is big and my account is also set to pay low commission but my aim is not only rebate. I have learnt that concentrating on a few stocks pays off better than jumping into new stocsk every day. I am also in YHOO in my 401K and my return YTD is 9.7% (you know that you cannot use margin in 401K). Definitely there are lots of good strategies to consider when you want to trade one stock but I prefer short term to benefit from theta decay since I like selling options. If I think a stock will go up, I sell PUT and if I think a stock will go down I sell call !!