08-26-2002, 07:56 AM
Last week was my 6th winning month in CPN options.
Another expiration under the belt.I am going to
post a trade I recommended on the Yahoo CPN board a few weeks ago.I may have posted it here as well.
I reversed some of these spreads at flat and slight credits on Friday.Also not related but nice was the day before expiration I sold 20 of the MIR 2.50
puts synthetically for a dime(That means I bot stock and sold the 2.50 call)The stock settled at about 3 bucks that Friday.Seven of the 2.50 calls
were not excercised...I got a free check for 350.00 as the stock came in on Monday at 3.00 bucks.Anyway here is my post..I post as Melvin10512 on the CPN Yahoo board
Long at 1.80 or 60% or more return
by: melvin10512 08/08/02 08:50 am
Msg: 218078 of 218080
Buy 1 jan03 7.50 put (4.80)
sell 2 jan03 5.00 put (2.75) for a total
of .70(70.00) credit.
A worst case basis is you own the stock at 1.80(100 shares for each spread) The margin may be higher even though your maximum loss would be 180.00 Assume a 250.00 margin per spread
Here is the P&L
Above 7.50 collect the 70.00- this is a damn good return on 250.00 margin or 180.00 total
risk.Also if for some reason we are over 10.00
you could sell the 7.50 put for additional credit.This would leave you naked short 2 of the 5.00 puts.Now your risk would be long
200 shares in the 4.00 area!
at 7.50 or above collect $70.00 per spread
at 6.50 collect 170.00
at 5.50 270.00
at 5.00 320.00
at 4.00 220.00
at 3.00 120.00
at 2.00 20.00 (still a return of 20%)
Yes folks these trades are boring as hell.You
won't have the daily "thrill of victory and agony of defeat".But you will probably be a winner.In addition this is a great window(over 2 with a homerun at 5)for profit.
Another expiration under the belt.I am going to
post a trade I recommended on the Yahoo CPN board a few weeks ago.I may have posted it here as well.
I reversed some of these spreads at flat and slight credits on Friday.Also not related but nice was the day before expiration I sold 20 of the MIR 2.50
puts synthetically for a dime(That means I bot stock and sold the 2.50 call)The stock settled at about 3 bucks that Friday.Seven of the 2.50 calls
were not excercised...I got a free check for 350.00 as the stock came in on Monday at 3.00 bucks.Anyway here is my post..I post as Melvin10512 on the CPN Yahoo board
Long at 1.80 or 60% or more return
by: melvin10512 08/08/02 08:50 am
Msg: 218078 of 218080
Buy 1 jan03 7.50 put (4.80)
sell 2 jan03 5.00 put (2.75) for a total
of .70(70.00) credit.
A worst case basis is you own the stock at 1.80(100 shares for each spread) The margin may be higher even though your maximum loss would be 180.00 Assume a 250.00 margin per spread
Here is the P&L
Above 7.50 collect the 70.00- this is a damn good return on 250.00 margin or 180.00 total
risk.Also if for some reason we are over 10.00
you could sell the 7.50 put for additional credit.This would leave you naked short 2 of the 5.00 puts.Now your risk would be long
200 shares in the 4.00 area!
at 7.50 or above collect $70.00 per spread
at 6.50 collect 170.00
at 5.50 270.00
at 5.00 320.00
at 4.00 220.00
at 3.00 120.00
at 2.00 20.00 (still a return of 20%)
Yes folks these trades are boring as hell.You
won't have the daily "thrill of victory and agony of defeat".But you will probably be a winner.In addition this is a great window(over 2 with a homerun at 5)for profit.