...............long butterflies. If you look at a chart from FB earnings to now, you will see a very very flat stock. Anyone holding straight long positions has been burned. The best trade would be to sell the $75 strike expiring today (actually Saturday but most of us cant trade on Saturday). Pretty risky if you consider there might be a possibility of big rise and you could be assigned when he stock rose above $75.
The butterfly mitigates this risk. Lets look at a long buterfly. Short 2 75W @ .65. Long a 76W at .32 and long a 74W at 1.18. Net cost is twenty cents plus commish plus lousy fills (options floating with your bids :/) $.25 if you have patience and a good platform and more than 10 contracts.
If FB ends next week at 75, you have 1 worthless long 76 and two worthless short 75's so your position is worth a buck from the 74 less commish and payment of a nickle to the options arbitrage. That is not a bad play and you will be have to put up margin of $1.00 and the cost of your initial position. That is a nice little chunk of change for your bet. There is bad news and that is your risk is your premium and profitability diminishes as you get further away from the center which is $75.
Larger spreads cost more and therefore are usually less profitable but smaller spreads are much harder to hit.
The key is that a stock that is suppose to move like FB is cheaper to initiate than a stock that is not suppose to move. Remember IV
This week started at 74. and ended very near where it started. The past few weeks have been very flat. Is next week going to be flat? Well lets stay tuned and see. I expect a little more volatility and will be doing a call back spread. :) ---------- credit if it drops big gains if it rises but bad news if it goes between the short and long strikes. :-o
What? I am strictly buy and hold with 5 separate purchases beginning with the IPO date and I am up 76%. I hardly call that being burned. Buy and hold is all I have ever done with any equity investment.
Talk about gambling! You are a very bitter pump. You believe in pie in the sky with absolutely no logic. I am not buying options. I am mitigating risk by creating a spread with the options. Instead of trying to understand, you resort to basic name calling.
You know what? All investing is gambling. I make money and my bet is hedged.
What about you? Dreaming of FB going to 200 next year or whatever is not realistic. These are dreams of call buyers and now I have you pegged as a call buyer. That is why trading spreads irratates you and you call the market in an almost insane manner. If your bet pays off, more power to you bud.
Your bitterness is another issue. I think you would feel a little better if you weren't mad all the time.........and you might invest or gamble better.