ld - we better sto talking about options, or you could be in danger of having the ugly part of my sick brain cell taking control of my posts.
Consider this: I am bullish SDLI and though, I would short it:
Price of the Sep 390 call: 19 5/16
SDLI closed 387 5/16.
I would short 5 SDLI, credit received: $1936 and change.
I would buy 1 contract, cost $1931 and change. Still have $5 to cover the fees of the transaction.
My risks: If SDLI closes 390, I loose the price paid for my calls plus $2 and change for covering my short.
If SDLI tanks to $290, I am flat, I may cover my short and recover the price paid for the contract.
Below $290, I win, Dollar for Dollar (only on 5 shares).
The good part: if SLI price is $411 at expiration, I am even again: selling the call and covering the short.
Above $411, each Dollar rise in SDLI would result in $0.95 profit in the position. (100 options for 5 shares).
So, with an investment of zero, my maximum risk is $1934, my maximum profit is not limited, my ROI is infinite if SDLI closes above $411 (or below $290). $411 is about 3.4* JDSU at which SDLI should trade.
Really need a broker, or an analyst (the couch one).
Only had coffe this morning though, not even more than usual. |
