BAC spread, risk/reward?

Discussion in 'Options' started by traderlux, May 4, 2011.

  1. any comments on the following BAC spread?
    (i know nothing about this, just re-posting for some one who had a question about the risk/reward)

    short 1 may $11 call

    long 3 jul $13 call

    looks like a db of $.20 with BAC about $12.50
  2. mikeenday

    mikeenday Guest

    spread is too fancy,
    the holy grail is to get the direction correct and only BUY calls or puts.
    u can sleep sound then.

  3. spindr0


    Model it correctly and you'll get your special some one to fawn over you

  4. I know I can be naive but what could happen placing this trade? The short call would be immediately assigned? Thanks.
  5. sbc


    the 11 call is in the money if stock price is currently 12.50. you will be assigned and you will have to buy the shares at the $11 price.
  6. spindr0


    You might want to rethink that one :)
  7. sbc


    let me re-think that...

    you will have to SELL at the $11 strike.
  8. newwurldmn


    I want to trade with sbc!
  9. ...made a mistake when i posted this, the trade was done with a cr not a db...

  10. Another question. What about using this strategy on Vix? I mean buy 3 sept. calls and sell 1 June. It is impossible to be assigned with Vix. Loss is only between 2 BE. Is there any possible problem I do not see? Backtest on TOS works well but as often, live trading is different.

    Thanks very much.
    #10     May 8, 2011