Yes.
Look at the option chain for HSOA.
HSOA is at about $5 a share.
The ask for April for the $5 put is about $1.30.
So, if you bought 10,000 Shares of HSOA for $50,000, and
bought 100 contracts of the $5 puts for about $13,000, then, in April, if HSOA is at $7.00, you would be up $7,000
$70,000 - $50,000 - $13,000
But, what are you really getting for that?
Unless you think that the stock falls below $3.70 a share. You lose. You're paying $13,000 for a $37,000 insurance policy.
What you might want to do here is look at the $5 calls:
They have an ask of about $1.50 so you could buy 100 contracts for $15,000.
If you think that this a $10 stock by then, unless there is fraud, you're only risking $15,000 and you would collect $35,000 if it goes to $10. The trouble that I have found with this is that things take often longer to play out than you'd like. A one time quarterly cost can blow up your options to worthless, or a third stocklemon report or whatever.
Anyway, you go the jist, but know you've got to go through the scenarios. |
