Assuming you don't own NTAP yet, and are bullish on it, you have a few options:
Buy-Write: Buy NTAP @ $30
1: Write APR 30 Call: You'll get a 6% return whether you get called or not. Your breakeven at expiration will be $28.25
2: Write APR 35 Call: You'll get a 19% return if called out, but your breakeven is only $29.3125
3: Write JUN 27.5 Call: You'll get a 7% return if called out, and your breakeven is $25.3750. This is a little better than #1, but you have to wait two more months.
4: Write JUN 30 Call: You'll get 11% if you're called out or not, and your breakeven is $26.6250. This is probably better than #1.
5: Write JUN 35 Call: 22% if called out, breakeven is $28.4375. This is better than #2, if you're aggressive.
Bull Put Spreads
6: If you think NTAP will be above $35 by June, the best BPS is the JUN 25-35 spread, with a return of 167% and a breakeven of $28.75.
7: If you think NTAP will be between $30 and $35 by June, the best BPS is the JUN 25-30 spread, with a return of 167% and a breakeven of $26.88. This is a better deal than #6.
8: If you think NTAP will be between $27.50 and $30, go for the JUN 25-27.5 spread. The return is 344%, and the breakeven is $25.56. This looks like the best deal of the bunch.
Of course, I'm not recommending any of these, because they all depend on a bullish outlook for NTAP, which I know nothing about. If you're willing to bet that NTAP will at least hold $30 for 3 months, #8 looks like a good deal.
Doug. |
