All are bullish plays.
Personally, I like the value of the Jan 2015 Puts selling them for money at $10 (already have 300 contracts from a month ago).
You can sell them for potential shares at $15 (bidding $5.20 for net price of $9.80...........or keeping the entire $5.20 if GTAT is above $15).
The Jan 2015 $17 Puts are bidding $6.80 so the net price would be $10.20 if the shares are Put to you.
What do y'all feel about the various ways to profit on GTAT's business?
Buying shares cost a lot of money and present the least leverage. Buying Calls also cost..........but selling Puts give you cash now.........and possibly more cash with time and then perhaps shares depending upon which strike price you sell.
As you know, I like selling puts. I sold most of the Jan 2016 $15 Puts (120) contracts averaged at $7.10. I also reinvested some of the cash into buying more shares. Very happy with your advice. Thanks!!!
Sentiment: Strong Buy
Great to read as sometimes it seems most options players use calls.
I priced out the Jan 2016 options but felt the 2015's were the better value as I hope to again sell puts when the 2015's expire. My struggle is the strike price........and whether to go with lower priced as they are have less risk.........with less upside.
This is a speculative stock in my opinion. But I am extremely bullish on it. I've taken the entire part of my portfolio dedicated to speculation and bought 10$ Jan-2015 calls with an average price of $2.86. It carries some risk in that if the stock ends at less than 2.86 by Jan-2015 then I've lost money (possibly all my money if its below 10$) but I think the risk/reward is a spectacular proposition here. I think we see GTAT close out the year at 20$ as a conservative number so my $2.86 calls will be up ~250% on the year if we hit that. I also think its entirely possible GTAT hits $30 before year end which would mean my calls are up 600% in one year.
Just my take. My position is risky but I think it's going to pay off.
Sentiment: Strong Buy
Your Jan 2015 $10 call shares are costing you $12.86 total whereas the Jan 2015 $17 Puts shares cost only me $10.20. This is why I sold the Puts rather than buying calls.
The other big difference is that you limit your losses to $2.86/share (shares under $10 and calls not exercised). The Puts lose $2.86 for me when the shares drop below the $17 - $6.80 - $2.86 or $7.34/share although I can lose more if this drops below that $7.34.
Your calls do get more upside than my Puts but I can mitigate that with selling more contracts. But, neither is really superior to the other..........but, this is why I selling the Puts vs. buying the calls.
Seems many bulls prefer buying calls to selling Puts.
Sounds good to me. Based on our earlier conversations, I'm thinking of doing the same. I can't see going wrong having $17 shares put on a $10.20 price. In fact, you can use the premium from selling the put if the price dips below $10.20.
Given that I am overall bullish, this seems like the perfect hedge. I've been too tied up at work to actually put this together, no pun intended. My brokerage doesn't actually allow options trading except through the phone, so it's a logistics issue.
The main thing is to be disciplined with the premium. Otherwise I think your strategy is correct here. The outlier is if GTAT really tanks...which I just don't see happening...or at least it's worth the risk.