semi-bullish strategy question

Discussion in 'Options' started by ksda, Jul 26, 2015.

  1. ksda

    ksda

    Lets say as an example that MSFT is currently at $50 a share and you think that in the next week that the stock price will most likely increase a lot. Additionally you also think that there is a small possibility that the stock will decrease a little but that you don't think that it can go below $48 a share.

    Is there any type of option strategy in which you would be able profit if the stock price was at any value greater than $48 per share, but where you would lose money if the stock price went below $48 per share? All of the bullish option strategies I've seen so far assume that if you used options for MSFT when it was at $50 that the breakeven point would be at some price greater than $50. None that I could find so far have one where the breakeven point is below $50.
     
  2. xandman

    xandman

    Sell 2 48 put
    Buy 1 50 put
    Buy 1 50 call

    Note: a warning on the naked put exposure if it does go below $48. Just increase the ratio (sell more 48 puts) to raise your desired break even at the expense of increasing risk (immensely).
     
    Last edited: Jul 26, 2015