INFN/Pat:
Submitted on 2016/08/01 at 2:07 pmINFN/Jeddah – That's right, we wanted to sell 30 of the 2018 INFN $8 puts for $1.75 ($5,250) in the LTP.
We talked about this last week, they are a cyclical business in a down cycle so let the short-term traders sell you their shares. Patient investors make most of their money from trades like this.
Thanks Aquila but I added it as it makes a nice Top Trade along with these:
DBA has gotten cheap and, for reasons I just outlined in the Webinar I like a new trade on them. For our LTP, we're going to add:
- Buy 30 DBA 2018 $19 calls for $2.60 ($7,800)
- Sell 30 DBA 2018 $23 calls for 0.85 ($2,550)
- Sell 30 DBA 2018 $21 puts for $1.60 ($4,800)
- Sell 15 DBA Jan $21 calls for $0.70 ($1,050)
That's a net $600 credit on the $12,000 spread and, with a little luck, we'll sell a couple of more rounds of short calls and collect $2,000 more before we're done.
For the OOP, we'll do a smaller spread:
- Buy 10 DBA 2018 $19 calls for $2.60 ($2,600)
- Sell 10 DBA 2018 $23 calls for 0.85 ($850)
- Sell 10 DBA 2018 $21 puts for $1.60 ($1,600)
- Sell 5 DBA Jan $21 calls for $0.70 ($350)
Here it's a net $200 credit on the $4,000 spread so the upside potential is $4,200, which is a 2,100% return on cash if all goes well – that will certainly help pay for the groceries. According to ToS, the margin on the short puts is just $4,000 – very efficient!
To make things a triple for Top Trade fans, let's reiterate our love for selling SKX (also discussed in the Webinar) 2018 $25 puts for $5.50, which nets you into the $23.58 stock for $19.50, worst case. That or you get paid $550 per contract NOT to own them if they are back over $25 in 18 months!
