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Wednesday Options Update: STI, VLO, UPS & RF
In the Sun Trust Bank trade you describe above, the spread is a debit?
I calced it out and it seems that a good profit is to made down to the 22 strike then below that the stock would be put to the trader for a heavy discount, being $22 less the intrinsic value of the 24 strike and the sold 22's put premium. A good way to buy wholesale? If the stock was at , say, $20 at exp then the 24 would be $4? So ultimately stock purchase price would be $22 less $4 divided by 2 (puts bought and sold at 2 to 1 ratio) less $0.18 = $19.82 ??
If stock is above $24 at exp then a $0.06 loss would result as both put would expire worthless ??
Is my thinking correct. I appreciate your comments. Regards..
Mar 11, 2010. 03:44 PM
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