Gary Hoch, options ramblings:
Alan, can you please outline a good options strategy for ASND
given the following criteria:
1) Very bullish
2) I see 60 or higher by years end.
3) Have $2K of high risk capital.
4) Broker charges roughly $30 for 5 contracts or less.
5) I continue to accumulate long shares on dips.
*6) Have margin account, authorized for long/short spreads, uncovered options writing.
*7) Do not like covered call writing.
*8) Have $5K to support certain Fed requirements.
Well, it's more complicated than it looks! So let's eliminate some strategies: Put/Straddle Writing and Synthetic Longs have unlimited risk and do not fit the profile. Calendar Spreads may be too conservative, although I'd earnestly investigate these.
Therefore, you're left with Call Purchases, Bull Credit/Debit Spreads and Call Backspreads.
Call Purchases. A common impulse is to buy distant calls, far outside the money. In my experience, the consistently profitable calls are near the money and within two months of the current series. For ASND, this means JUN since JUL is not traded. But, if you enjoy paying for time, Long 8 SEP50C offers leverage -- I'd insist on locking profits via nearer term calls! However, you've stated that protection via covered calls is not desirable. Therefore, JUN is the remnant and Long 22 JUN50C ain't bad; Long 10 JUN45 is less aggressive. (Increased volatility helps these positions.)
Call Backspread. This strategy is hurt by time. On a long-term play, profits often evaporate even if your hunch about the underlying is correct. Therefore, I prefer short-term plays. Nonetheless, here's a *low yield* example: Long 3 SEP50C, Short 2 SEP40C. (Increased volatility helps this position.)
Bull Credit/Debit Spreads. At this time, there does not appear to be a sufficiently lucrative play. The highest yield play appears to be Long 5 SEP35P, Short 5 SEP40P -- credit. (Reduced volatility helps this position.)
As you can see, the Call Purchase sounds best. If it were me, I'd go with JUN calls, establish a hard stop to limit loss and roll up/out profits. (Between rolls, I'd lock profits with MAY writes.)
If it's not apparent, I also *really* like Calendar Spreads for ASND: Tomorrow, I'll establish Long JUN 45, Short MAY 45 -- hoping for a natural of <=1.
Oops, just invited to dinner with a special lady. Gotta go.
Good luck! |
