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Two Options Strategies

Options Strategies, vertical spread, bull put

Options Strategies, vertical spread, bull putLast evening (in Italy, it was afternoon in the United States) I set two options strategies, two Vertical Spread (specifically two Bull Put) on as many American shares. Let's see them in detail.

The first Bull Put is on Analog Device Inc. (Ticker: ADI), whose chart you can see below. The Bull Put is made up as follows: sale of the option with strike $ 82.50 and purchase of the option with strike $ 80.00. The expiry is on January 19 (43 days).

ADI, Analogic Device, nasdaq, dow jones, s&p500, options strategy, bull put, vertical spread

 

The mid closing price yesterday was $ 0.55 against a margin requested by Interactive Brokers (broker with which I do trading) of $ 250.00. It also represents the maximum loss with a gain of 22% in a month and a half (about 14.5% per month) and a reward/max loss ratio of 1:4.5. Good to be a stock even though it is because the strike of the sold option is close enough to the current price and even the Delta is showing it (-0.26 slightly above my standards).

Volumes are good, yesterday's open interest was 1,437 contracts for the PUT strike option $ 82.50 and of 5,987 for the PUT strike option $ 80.00. My operation is based on holding the important support at $ 84.00. Stop loss at the triple of the premium cashed, even though a breakout of such support would already give a signal to close the transaction without waiting any further.

The Analog Device Inc. next Earnings Date: Wednesday 21 February 2018 (76 days).

The second Bull Put is on Lam Research Corp. (Ticker: LRCX), whose chart you can see below. Operation realised by selling the option with strike $ 160.00 and buying the option with strike $ 155.00. The expiry always on January 19 (43 days).

LRCX, Lam Research, nasdaq, dow jones, s&p500, options strategy, bull put, vertical spread

 

Yesterday's mid closing price was $ 0.60 against a margin always required by Interactive Brokers of $ 500.00 which also corresponds to the maximum loss per contract. So we have a 12% gain in a month and a half (8% per month). In this case, less than what we would get with Analogic Device, with a maximum reward/max loss ratio of 1:8 (slightly higher than my maximum limit of 1:7).

However, it must be taken into account that the strike of the option sold is quite far from the current price and even the Delta shows this (-0.11). The volumes are pretty good, yesterday's open interest was 410 contracts for the PUT strike option $ 160.00 and of 1,313 for the PUT strike option $ 155.00.

My operation is based on holding of the supports at $ 180.00 area and at $ 168.00 area. Stop loss at the triple of the premium cashed, even though the graphical situation is to be evaluated in case the share is always well above the $ 168.00 level

The Lam Research Corp. next Earnings Date: Wednesday 24 January 2018 (48 days).

 

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