A Cheap And Safe Way To Own Facebook With Synthetic Stock And A Married Put [View article]
UPDATE to the Facebook (FB) options trade as of 11/30/12:
My Seeking Alpha article of 8/15/12 presented a cheap and safe way to play FB into mid-January 2013 by using a combination of options. The trade involved buying a Jan 16 call in place of 100 shares of stock, and then protecting that position with the purchase of a Jan 20 put. The cost basis of the protective put was lowered by selling a Sept 18 put and a Sept 22 call. After the September expiration date, the residual option position had a cost basis of only $8.00 per share with the protective put limiting any potential loss to no more than $4.00 per share. UPDATE to the Facebook (FB) options trade as of 11/30/12:
Based upon an equal dollar investment on 8/15/12, stock ownership would currently be providing a profit of 37%, while the residual option position is currently providing a profit of 47%. If FB stock continues to rise to $33, the option position will be showing a profit of 100% as compared with a 62% profit associated with stock ownership. The option position will continue to have put protection into mid-January 2013, whereas stock ownership has no such protection.
10 Things To Consider Before You Buy An Option [View article]
dmrosy -- Suppose the bid/ask spread on the current-month, at-the-money calls is 1.80/2.20. The average of those is 2.00 and the difference is .40. Then .40/2.00 = 20%. I would say those calls are not very liquid.
Using Weekly Options In A Calendar Or Diagonal Spread [View article]
We've added Update #2 to this trade in our Olmstead Options blog, along with a suggestion on how to continue the trade, if you prefer not to close it out yet. It's showing a nice profit at this point.
Good article and good discussion on the pros and cons of covered calls. For those who are considering covered calls as an income strategy, we've discussed the potential pitfalls in several SA articles, as well as in our blog, though it's certainly covered in this discussion, as well.
Because one of the things we do on our site is options education, we also review why weekly options might work well as covered calls and explain how to use weekly options to create a diagonal spread. Our illustration uses iShares Silver Trust (SLV) weekly options.
Will Silver And Silver Wheaton Resume Their Rally? [View article]
Weekly options expire tomorrow (9/28). We've added an update to the SLV diagonal trade in our Olmstead Options blog, along with a suggestion on how to continue the trade, for those who prefer not to close it out yet.
Using Weekly Options In A Calendar Or Diagonal Spread [View article]
Weekly options expire tomorrow (9/28). We've added an update to this trade in our Olmstead Options blog, along with a suggestion on how to continue the trade, if you prefer not to close it out yet.
A Cheap And Safe Way To Own Facebook With Synthetic Stock And A Married Put [View article]
UPDATE TO THE FB OPTIONS TRADE as of 9/21/12: My Seeking Alpha article of 8/15/12 presented a cheap and safe way to play FB into January 2013 by using a combination of options. The trade involved buying a Jan 16 call in place of 100 shares of stock, and then protecting that position with the purchase of a Jan 20 put. In order to lower the cost basis for the protective put, a Sept 18 put and a Sept 22 call were sold. On this expiration date (9/21) for the September options , the Sept 18 put expired worthless for a profit of $.70 and the Sept 22 call was bought to close for a profit of $.20. Thus, the cost basis for the Jan 20 put was lowered by $.90 down to $2.30.
The residual position of the Jan 16 call and Jan 20 put is currently showing a profit of almost 10% based upon the original cost of the trade. The residual position has the potential for unlimited profit if the price of FB rises. If the price of FB falls below $20, the protective put limits the loss to at most $4 per share at the January options expiration and only about $3 per share if the trade is closed by mid-December.
Time Sensitive Trade: Backspreads With Qualcomm's Weekly Options [View article]
Hi Wealthlover (great name): Let me first emphasize that the weekly options backspread trade on QCOM was based upon the assumption that the price of QCOM would receive a nice bounce following the iPhone 5 announcement by AAPL. The connection was that a QCOM product might be used with the iPhone 5, and an impressive announcement would boost QCOM stock price
I think you are inquiring about doing a similar backspread on QCOM using the weekly options of October 12 in anticipation of the AAPL earnings report on October 15. I would be hesitant to do that trade, since a QCOM response to AAPL earnings is not so clear. Also, AAPL might even pull back after its earnings report as it did in July.
Time Sensitive Trade: Backspreads With Qualcomm's Weekly Options [View article]
ADDENDUM: 9/13/12 2:30pm ET
Qualcomm, Inc (QCOM) has moved up nicely yesterday and today. With QCOM currently trading above $64.00, the stock price has not quite reached the level we had projected, but the backspread trade with weekly options is showing a profit and should be closed now. One of the benefits of the backspread trade is that it is unnecessary to wait until expiration to get the best exit price for the trade. An exit at the current price provides a return of approximately 59% relative to the maximum risk on the trade, in only five trading days.
Finding Bright Spots In A Mixed IPO Market [View article]
We do not own Facebook (FB), but we have covered it in several SA articles. In our blog we offer a few options strategies to buy in at a reduced risk, as well as a stock repair strategy if you are underwater.
In order for the stock repair strategy to work, however, the stock must make a small recovery over the next several months.
How Mark Zuckerberg Duped The Market [View article]
We do not own Facebook (FB), but we have covered it in several SA articles. In our blog we offer a few strategies to buy in at a reduced risk using options, as well as a stock repair strategy if you are underwater.
In order for the stock repair strategy to work, however, the stock must make a small recovery over the next several months.
Zuckerberg Shows He's The Right Man For The Job [View article]
We do not own Facebook (FB), but we have covered it in several SA articles and in our blog we offer a few strategies to buy in at a reduced risk using options, as well as a stock repair strategy if you are underwater.
In order for the stock repair strategy to work, however, the stock must make a small recovery over the next several months.
A Cheap And Safe Way To Own Facebook With Synthetic Stock And A Married Put [View article]
Are Short Sellers Really Covering? (Part 1) [View article]
http://seekingalpha.co...
A Cheap And Safe Way To Own Facebook With Synthetic Stock And A Married Put [View article]
My Seeking Alpha article of 8/15/12 presented a cheap and safe way to play FB into mid-January 2013 by using a combination of options. The trade involved buying a Jan 16 call in place of 100 shares of stock, and then protecting that position with the purchase of a Jan 20 put. The cost basis of the protective put was lowered by selling a Sept 18 put and a Sept 22 call. After the September expiration date, the residual option position had a cost basis of only $8.00 per share with the protective put limiting any potential loss to no more than $4.00 per share.
UPDATE to the Facebook (FB) options trade as of 11/30/12:
Based upon an equal dollar investment on 8/15/12, stock ownership would currently be providing a profit of 37%, while the residual option position is currently providing a profit of 47%. If FB stock continues to rise to $33, the option position will be showing a profit of 100% as compared with a 62% profit associated with stock ownership. The option position will continue to have put protection into mid-January 2013, whereas stock ownership has no such protection.
Using Weekly Options In A Calendar Or Diagonal Spread [View article]
http://bit.ly/Ot16AP
10 Things To Consider Before You Buy An Option [View article]
Suppose the bid/ask spread on the current-month, at-the-money calls is 1.80/2.20. The average of those is 2.00 and the difference is .40. Then .40/2.00 = 20%. I would say those calls are not very liquid.
Using Weekly Options In A Calendar Or Diagonal Spread [View article]
http://bit.ly/RFKHJ0
Covered Calls For Income Can Cost Dearly In Long-Term Gains [View article]
Good article and good discussion on the pros and cons of covered calls. For those who are considering covered calls as an income strategy, we've discussed the potential pitfalls in several SA articles, as well as in our blog, though it's certainly covered in this discussion, as well.
Because one of the things we do on our site is options education, we also review why weekly options might work well as covered calls and explain how to use weekly options to create a diagonal spread. Our illustration uses iShares Silver Trust (SLV) weekly options.
Will Silver And Silver Wheaton Resume Their Rally? [View article]
http://bit.ly/UQer8I
Using Weekly Options In A Calendar Or Diagonal Spread [View article]
http://bit.ly/PugREH
A Cheap And Safe Way To Own Facebook With Synthetic Stock And A Married Put [View article]
My Seeking Alpha article of 8/15/12 presented a cheap and safe way to play FB into January 2013 by using a combination of options. The trade involved buying a Jan 16 call in place of 100 shares of stock, and then protecting that position with the purchase of a Jan 20 put. In order to lower the cost basis for the protective put, a Sept 18 put and a Sept 22 call were sold. On this expiration date (9/21) for the September options , the Sept 18 put expired worthless for a profit of $.70 and the Sept 22 call was bought to close for a profit of $.20. Thus, the cost basis for the Jan 20 put was lowered by $.90 down to $2.30.
The residual position of the Jan 16 call and Jan 20 put is currently showing a profit of almost 10% based upon the original cost of the trade. The residual position has the potential for unlimited profit if the price of FB rises. If the price of FB falls below $20, the protective put limits the loss to at most $4 per share at the January options expiration and only about $3 per share if the trade is closed by mid-December.
Time Sensitive Trade: Backspreads With Qualcomm's Weekly Options [View article]
Let me first emphasize that the weekly options backspread trade on QCOM was based upon the assumption that the price of QCOM would receive a nice bounce following the iPhone 5 announcement by AAPL. The connection was that a QCOM product might be used with the iPhone 5, and an impressive announcement would boost QCOM stock price
I think you are inquiring about doing a similar backspread on QCOM using the weekly options of October 12 in anticipation of the AAPL earnings report on October 15. I would be hesitant to do that trade, since a QCOM response to AAPL earnings is not so clear. Also, AAPL might even pull back after its earnings report as it did in July.
Time Sensitive Trade: Backspreads With Qualcomm's Weekly Options [View article]
Qualcomm, Inc (QCOM) has moved up nicely yesterday and today. With QCOM currently trading above $64.00, the stock price has not quite reached the level we had projected, but the backspread trade with weekly options is showing a profit and should be closed now. One of the benefits of the backspread trade is that it is unnecessary to wait until expiration to get the best exit price for the trade. An exit at the current price provides a return of approximately 59% relative to the maximum risk on the trade, in only five trading days.
Finding Bright Spots In A Mixed IPO Market [View article]
In order for the stock repair strategy to work, however, the stock must make a small recovery over the next several months.
http://bit.ly/Q09M18
How Mark Zuckerberg Duped The Market [View article]
In order for the stock repair strategy to work, however, the stock must make a small recovery over the next several months.
http://bit.ly/Q09M18
Zuckerberg Shows He's The Right Man For The Job [View article]
In order for the stock repair strategy to work, however, the stock must make a small recovery over the next several months.
http://bit.ly/Q09M18