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New York Community Bancorp Inc. Message Board

  • biglefthook_00 biglefthook_00 Jan 19, 2012 6:54 AM Flag

    Let me share a strategy

    Buy a stock then sell both sides of the Jan 2013 market price strike price then hedge the put sale..

    For example: BAC

    Yesterday's close was $6.80

    The Jan 2013 $7.50 call sold for $1.10 the put for $1.89...= $2.90

    Jan 2013 $5 put for .60

    So!

    Return is (2.90 -.60) ?$6.80 = $2.30 /$6.80 = 40%

    Giveaway is $7.50 + $2.30 = $9.80

    Exposure is .20 on sale of JAn 2013 $7.50 put...if the stock goes UP you BUY these back....if the stock goes down you buy back these calls then sell the $5 calls

 
NYCB
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