please help me

Discussion in 'Options' started by Gueco, May 16, 2006.

  1. Gueco


    Hi everyone

    Lets say I happen to know that a stock that is currently at $50 is going to hit $55 over the next month.

    Now I want to chose which option strike would be the best. I'm looking for the biggest % return between today and the day it hits $55.

    What tools do I have available that can help me? I would prefer free tools but any help would be great.

  2. tools
    free tools
    % return

    just buy the stock and make life less complicated!
  3. Truff


    Intelligent answer. Gueco, this is a great site for options
  5. Gueco,

    If you really "know" that the stock is going to hit 55 in 30 days, you can.

    1.- Buy 1000 or as many as you possibly can, $50 calls now.

    You are risking 100% of capital invested for an 400% return approx if you are paying $1.00 for the calls.

    or if you want to be even more aggresive and you have enough money for margin req...

    2.- Sell 1000 55 puts and buy 5000 50 calls with the money received from the puts.
  6. Ebo


    Either help the guy or don't respond .

    What a TOOL!
  7. Gueco


    thanks everyone :)
  8. cnms2


    Firstly: you don't know that it will hit $55 over the next month. So be aware of your risk. Use money management.

    Secondly: plug several scenarios into an options analyzer and compare the outcomes. For front or back month horizon, usually you get the best reward / risk buying in the money options, or verticals with the long leg in the money.
  9. so whats the stock?
  10. Ebo


    Why would he tell you before he is long?
    #10     May 16, 2006