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hajimow

Registered: Mar 2004
Posts: 2659

06-21-12 02:57 PM

It is obvious that YHOO is in uptrend. Here is my trade idea which has low risk and has the potential of more than doubling your money in 4 weeks.

First leg:
Sell 15/14 PUT Spread for July for credit of about 15 cents. Sell 15 PUT and buy 14 PUT.

Second Leg:
Buy 15/16 CALL spread for July for debit of about 0.62. (Buy Call 15 and sell Call 16).

Money paid for one contract of this leg: 0.62-0.15=0.47
Max profit : 0.53 minuts commission.

Put a stop loss if YHOO hits 14.70 (possibility is very low).
Close position if you make 80% before expiry.

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newwurldmn

Registered: Apr 2011
Posts: 2622

06-21-12 03:01 PM

Why not just buy stock and buy some puts. Why trade four legs?

I've been doing okay just selling 15 strike puts in YHOO every month.

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hajimow

Registered: Mar 2004
Posts: 2659

06-21-12 03:16 PM

Quote from newwurldmn:

Why not just buy stock and buy some puts. Why trade four legs?

I've been doing okay just selling 15 strike puts in YHOO every month.

I did not want to recommend selling naked PUT (although I am also doing that) because I wanted to propose a protected trade.
Have you calculated the margin comparison between your idea dn my idea? potential gain/loss?
It is great to hear that you are still trading YHOO. 85% of my account is on YHOO stock and options and I am doing great.

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newwurldmn

Registered: Apr 2011
Posts: 2622

06-21-12 04:15 PM

Quote from hajimow:

I did not want to recommend selling naked PUT (although I am also doing that) because I wanted to propose a protected trade.
Have you calculated the margin comparison between your idea dn my idea? potential gain/loss?
It is great to hear that you are still trading YHOO. 85% of my account is on YHOO stock and options and I am doing great.

I'm not that big. (no position is) but yhoo is consistent with my other sizes.

Margin on the YHOO put will be approx $3. Your thingy will be the premium. But they have different distributions. Do you really think YHOO will either be 10 or 20 by july?
More likely it will be between 14 and 16. In which case the put is a better trade.
I sell the put because I don't see the upside in YHOO and I tihnk it's floored at 12. So my downside is $3 and my upside is how many times i can jump infront of that car.

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hajimow

Registered: Mar 2004
Posts: 2659

06-21-12 06:21 PM

Quote from newwurldmn:

I'm not that big. (no position is) but yhoo is consistent with my other sizes.

Margin on the YHOO put will be approx $3. Your thingy will be the premium. But they have different distributions. Do you really think YHOO will either be 10 or 20 by july?
More likely it will be between 14 and 16. In which case the put is a better trade.
I sell the put because I don't see the upside in YHOO and I tihnk it's floored at 12. So my downside is $3 and my upside is how many times i can jump infront of that car.

My trade idea shows that I believe YHOO will be a little over $16 and I don't expect it go anywhere near 10 ot 20.
Throwing yourself in front of the car was a good analogy.

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hajimow

Registered: Mar 2004
Posts: 2659

06-21-12 06:40 PM

S&P is down 1.6% and YHOO is down 0.9%. I see a short term relative strength in YHOO. Watch for a pop in the next few days if the market allows.

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