Tuesday, August 08, 2017 12:21:33 PM
Selling puts to buy calls, but with a gap in strikes.
If it weren't for the split strikes this would be an options version of synthetic stock. Less can be gained because of the split strikes, but if you time it right then you are less likely to be put the stock at a price that is lower than the strike of the Put that is sold.
For instance, if you think VRX will be trading higher next January, you could sell the January 2018 $16 Puts today for $1.99 and buy the January 2018 $19 Calls for $1.63. Entering the trade, you start out with a net $0.36 in your pocket. If you want a little more insurance, you could also buy a January 2018 $11.00 Put which last traded at $0.40. The cost of the total trade would then be 4-cents. And you have an essentially free trade that expires over 5-months away.
Because TEVA's earnings release started this slide down in the drug stocks a few days ago as it dropped about 41% over a few days, and since TEVA is now trading at a price not seen since 2003, I entered this type of trade this morning using TEVA. I sold TEVA Jan 19 '18 $17.50 Puts for $1.73 then purchased TEVA Jan 19 '18 $22.50 Calls for $1.12. This left $0.61 in my pocket. And because of the size of the drop, and the number of years this current price goes back, I'm not spending that $0.61 to buy further downside protection.
Recent BHC News
- Form SD - Specialized disclosure report • Edgar (US Regulatory) • 09/20/2024 08:05:49 PM
- Meta Strengthens Child Privacy on Instagram; Google Overturns $1.7 Billion Antitrust Fine; Snap Updates Spectacles • IH Market News • 09/18/2024 10:13:07 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 09/09/2024 08:54:15 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 09/09/2024 08:37:11 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 09/06/2024 05:48:09 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 09/03/2024 08:21:33 PM
- Form SC 13G - Statement of Beneficial Ownership by Certain Investors • Edgar (US Regulatory) • 08/30/2024 10:12:52 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/21/2024 08:11:10 PM
- Form 3 - Initial statement of beneficial ownership of securities • Edgar (US Regulatory) • 08/20/2024 09:39:04 PM
- Form SC 13D/A - General Statement of Acquisition of Beneficial Ownership: [Amend] • Edgar (US Regulatory) • 08/19/2024 09:48:41 PM
- Form S-8 - Securities to be offered to employees in employee benefit plans • Edgar (US Regulatory) • 08/01/2024 09:27:29 PM
- Form 10-Q - Quarterly report [Sections 13 or 15(d)] • Edgar (US Regulatory) • 08/01/2024 08:45:52 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 08/01/2024 11:07:46 AM
- NBA Signs Billion Dollar Broadcast Deal, CrowdStrike Criticized for Insufficient Reward, Honda Shuts Down Chinese Factory • IH Market News • 07/25/2024 10:15:46 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 07/19/2024 08:34:38 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 07/19/2024 11:10:34 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 07/17/2024 08:12:48 PM
- Form 3 - Initial statement of beneficial ownership of securities • Edgar (US Regulatory) • 07/17/2024 08:11:06 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 05/21/2024 08:09:40 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 05/21/2024 08:08:33 PM
VHAI - Vocodia Partners with Leading Political Super PACs to Revolutionize Fundraising Efforts • VHAI • Sep 19, 2024 11:48 AM
Dear Cashmere Group Holding Co. AKA Swifty Global Signs Binding Letter of Intent to be Acquired by Signing Day Sports • DRCR • Sep 19, 2024 10:26 AM
HealthLynked Launches Virtual Urgent Care Through Partnership with Lyric Health. • HLYK • Sep 19, 2024 8:00 AM
Element79 Gold Corp. Appoints Kevin Arias as Advisor to the Board of Directors, Strengthening Strategic Leadership • ELMGF • Sep 18, 2024 10:29 AM
Mawson Finland Limited Further Expands the Known Mineralized Zones at Rajapalot: Palokas step-out drills 7 metres @ 9.1 g/t gold & 706 ppm cobalt • MFL • Sep 17, 2024 9:02 AM
PickleJar Announces Integration With OptCulture to Deliver Holistic Fan Experiences at Venue Point of Sale • PKLE • Sep 17, 2024 8:00 AM