Please help in answering this investment problem?

September 19, 2011 by  
Filed under Articles, Option Trading

The common stock of the C. A. L. L. Corporation has been trading in a narrow range around $50 per share for months, and you believe it is going to stay in that range for the next three months. The price of a three-month put option with an exercise price of $50 is $4, and a call with the same expiration date and exercise price sells for $7.

•a. What would be a simple options strategy using a put and a call to exploit your conviction about the stock price’s future movement

•b. What is the most money you can make on this position? How far can the stock price move in either direction before you lose money?

•c. How can you create a position involving a put, a call, and riskless lending that would have the same payoff structure as the stock at expiration? The stock will pay no dividends in the next three months. What is the net cost of establishing that position now?

Afternoon Forex Review with Kevin Chau – Mar 26

March 19, 2011 by  
Filed under Forex review

IDEA Global’s Chau comments on price action today and direction next week. Chau discusses geopolitical concerns and NFP.

Buying straddles on the XLF?

September 17, 2010 by  
Filed under Option Trading

All, I have just gotten into options trading, but I cannot figure out the direction of the financial stocks. It seems to vary based on the day-to-day news. However, I can see that they are extremely volatile. Do you think buying straddles on the XLF is the best options strategy to play this volatility or do you think the financial stocks will stabilize?

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