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Trade idea on YHOO with great profit
- Thread starter hajimow
- Start date
Quote from hajimow:
I did not say for sure. That is my prediction based on my experience and the info that I get from the market.
Answers to other questions:
Buying Call will be more profitable but you are buying time and selling PUT you are selling time. In PUT you have more cushin if the stock drops. I am doing this in a rather huge volume (over 200 contracts) so I should make good money if I am right.
All things said, I agree that no trade is risk free. I did not say my trade is risk free. YHOO can go below 11 and even can go to zero. One of my early trades in the market was buying Bre-X mineral shares. Market veterans know what happened to it in 1998.
By the way my average price on this trade is 0.65 and not 0.43
With big risk (20,000 dollars a point). I was short Jan12 12.5 puts when the stock was hovering around 13. But at 16 I don't think the risk reward favors puts. If Jerry Yang does some stupid this stock can be 12 real fast.
Also, 43 cents isn't 17% return. It's closer to 3%.
Quote from newwurldmn:
With big risk (20,000 dollars a point). I was short Jan12 12.5 puts when the stock was hovering around 13. But at 16 I don't think the risk reward favors puts. If Jerry Yang does some stupid this stock can be 12 real fast.
Also, 43 cents isn't 17% return. It's closer to 3%.
Every contract costs me $250 in cash so with 2500, I can trade 10 contracts and get $430. So if the trade goes in my favor, I will make $430 minus about $8 commission.
Rate of return = [$430-$8]/ 2500=16.88 %
Quote from hajimow:
Every contract costs me $250 in cash so with 2500, I can trade 10 contracts and get $430. So if the trade goes in my favor, I will make $430 minus about $8 commission.
Rate of return = [$430-$8]/ 2500=16.88 %
I would not be calculating your return based on your margin requirements. Firstly those requirements change. Secondly, it doesn't represent your real risk. You should be comparing your return to the real capital at risk (which is 14.6/share). 3%. It's not a bad return, but a more honest number.