Option Investor
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2 New Portfolio Trades

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Oil Prices continue to rise. Eventually the spill over effect will spread across to other sectors like the airlines and transportaion. Retailers will eventually pass this increase unto consumers in the form of higher prices. The summer also seems to show no relieve for this increase in higher prices. Let's look at a couple of plays today. We would like to take a look and see what impact higher prices will have on the market today.

Call Credit Spreads

Conservative/ Bearish Credit Spread

Fedex FDX: $83.96
BUY CALL AUG-95.00 FDX-HQ ASK=$0.15
SELL CALL AUG-90.00 FDX-HR BID=$0.40

INITIAL "NET-CREDIT" TARGET = $0.25-$0.30
POTENTIAL PROFIT (X 5 contracts @ $0.25) = $125
MARGIN REQUIREMENT (X 5 contracts) = $2350
RETURN ON INVESTMENT (max) = 5.31%



Put Credit Spreads

Conservative/ Bullish Put Spread

Nikke NKE: $86.24
BUY PUT AUG-75.00 NKE-TO ASK=$0.20
SELL PUT AUG-80.00 NKE-TP BID=$0.55

INITIAL "NET-CREDIT" TARGET = $0.35-$0.40
POTENTIAL PROFIT (X 5 contracts @ $0.35) = $175
MARGIN REQUIREMENT (X 5 contracts) = $2325
RETURN ON INVESTMENT (max) = 7.52%

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