Saturday, May 8, 2010

Volatility high = Put premiums very high

If you are willing to own some big cap names here at 40% lower prices and still collect an option premium, there are some interesting opportunities out there.

Write an AAPL June $150 put for $0.80. AAPL is currently trading around $235 (36.2% stock price decline required to lose money on option). If you believe AAPL will not trade down to $150 by June 18th then this is a money maker.

Write a GOOG May $390 put for $1.00. GOOG is currently trading around $493 (20.8% stock price decline required to lose money on option). If you believe GOOG will not trade down to $390 by May 21st then this is a money maker.

Write a BRK.B May $70 put for $1.00. BRK.B is currently trading at $74 (7% stock price decline required to lose money on option). If you believe BRK.B will not trade down to $70 by May 21st then this is a money maker.

Write a BP June $42.50 put for $0.83. BP is currently trading at $49 (13.2% stock price decline required to lose money on option). If you believe BP will not trade down to $42.50 by June 18th then this is a money maker.

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