Option trade on ADI

H

hajimow

I am doing the following trade on ADI for May.

Sell 30 PUT , buy 30 CALL May , and sell 32.5 May
You can do this trade for flat debit or the debit of 10 cents. The gain is 2.5 per set.

ADI will announce the strong results on May 18 before option expiry day.

I am not worried about naked 30 PUT.
 
I'd say that looks like a reasonable trade to me.
If ADI moves up sharply, the max profit would be about 30 to 35% based on the capital (option margin) requirement.

The underlying looks to have had support @ 29
 
Quote from stoic:

I'd say that looks like a reasonable trade to me.
If ADI moves up sharply, the max profit would be about 30 to 35% based on the capital (option margin) requirement.

The underlying looks to have had support @ 29
More...

Even if the shares are assigned which I give it a 2% chance, you will get 20 cents dividend before June option expiry (less than a month)

For this Q ADI has predicted higher margin, 300% gain compared to the same Q last year (54 cents compared to 18 cents) and 12% Q to Q gain. Like other companies in the same sector, it will have a rosy next Q outlook.
 
at 10:32 AM ET Friday the bid/ask are
32.5 Call 0.21/0.29
30 Call 1.05/1.15
30 PUT 1.05/1.1

Taking the mid points you can do this trade for

+1.075 -1.1+0.25=0.22 Credit

and you might make 2.5 max plus 0.22 =2.72

You will start to lose at 29.78

Commission is not included in this calculation.
 
The fact that TXN will report on Monday April 26, will make ADI volatile for today and specially on Monday but everything should be on the rosy side considering that fact that we also expect a strong result from TXN.
 
Now at 11:23 Monday 4/26/10
Call 32.5 0.46/049
Call 30 1.60/175
PUT 30 0.6/0.7

If we take the middle points we have
+0.65 +0.47-1.67=-0.55

That is debit of 55 cents
 
You must log in or register to reply here.
Back
Top