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FDG 3 for 1 SPLIT ADJUSTMENT

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ADJUSTMENT FOR FDG 3-1 STOCK SPLIT

FDG 3 for 1 Stock split 9-13-05

OPTION ADJUSTMENT


Existing Series 100 shares - Adjusted Series 100 shares

Oct 120 PUT FDG-VD ------------> Oct 40 Put FDG-VH
Oct 115 PUT FDG-VC ------------> Oct 38 3/8 Put FDG-VW


so instead of having 10 contracts with a 120/115 put credit spread

you now have 30 contracts with a 40/38 3/8 put credit spread.

EVERYTHING IS REDUCED BY one-third

So your initial contract below:

SELL FDG-VD FDG OCT 120.0 120 PUT CREDIT = $2.60
BUY FDG-VC FDG OCT 115.0 115 PUT DEBIT = $1.60
NET CREDIT = $1.00
INITIAL "NET- CREDIT TARGET= $1.00 or $100.00
POTENTIAL PROFIT (x 10 CONTRACTS @ $1.00 = $1,000.00
MARGIN REQUIRE. (x 10 CONTRACTS $4,000.00
RETURN ON INVESTMENT= 25.00%
EXIT Strategy IF NET DEBIT = $2.50


Now will look like this.


SELL FDG-VH FDG OCT 40 PUT CREDIT = $0.8666 (roughly $0.87)
BUY FDG-VW FDG OCT 38 3/8 PUT DEBIT = $0.5333 (roughly $0.54)
NET CREDIT = $0.3333 (roughly $0.34)
INITIAL "NET- CREDIT TARGET= $1.00 or $100.00
POTENTIAL PROFIT (x 30 CONTRACTS @ $).333 = $1,000.00
MARGIN REQUIRE. (x 30 CONTRACTS $4,000.00
RETURN ON INVESTMENT= 25.00%
* EXIT Strategy IF NET DEBIT = $83.333 ( round up to $0.85
)

The risk/reward ratio is the same. You have 3 times the contracts, but
the strike price is only 1 - 5/8's apart and not 5 points.

So 10 X 5 = 5,000

is equal roughly to 30 X 1 - 5/8 = $4,875

The risk.reward remains very close to the same


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