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iShares Russell 1000 Value Message Board

JoeTaxPayer2 4 posts  |  Last Activity: Jun 23, 2016 8:07 AM Member since: Aug 13, 1998
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  • Reply to

    Potash Options.

    by joetaxpayer2 Jun 22, 2016 10:23 AM
    joetaxpayer2 joetaxpayer2 Jun 23, 2016 8:07 AM Flag

    You're smart to stand you ground. Yes, it's a gamble. And my strategy is to have a number of these going at any time. A 50%+ return only works if I'm successful more than 2 of 3 bets. I prefer the long term spreads where the return is 4 or 5 to 1. (No idea who is voting you down, you're obviously smart and articulate.) We'll see how this one goes. I'm betting the 52 week low ($14.64) is well behind us.

  • Reply to

    Potash Options.

    by joetaxpayer2 Jun 22, 2016 10:23 AM
    joetaxpayer2 joetaxpayer2 Jun 22, 2016 11:54 AM Flag

    Understood. For you, the $14/$12 put spread costs about 50 cents. 4X your money if you are right, and it closes below $12 then.

  • joetaxpayer2 by joetaxpayer2 Jun 22, 2016 10:23 AM Flag

    An option trade on POT - I purchased the Jan'17 $14 calls (for $3.28) and sold the $16 call (for $2.00). Net out of pocket is $1.28 (50 contacts total $6400). If POT closes at $16 or higher in January, the spread is worth $10,000. My break even is $15.28, or about 10% lower from here. A 56% return if the stock trades flat or slightly lower over the next 7 months.
    This is a great trade if you are bullish on POT. You'd need to see the stock rise beyond $26 to make the same return by January. Of course, if it drops to $14, I've lost 100%. If the stock will drop, don't do this. The trade is only for bulls.

  • I just bough another covered call spread. Buying the shares at $3.63 and selling the January $3 calls for $1.32. Net out of pocket $2.25 per share. If the stock is over $3 in january, it's bought from me at $3, and I made 33%. If not, I have the stock at a cost of $2.25, nearly 40% downside protection. On the flip side, to match my gain, you'd need the price to go past $4.84 by then. It can happen, of course. Last - if the stock goes crazy, doubling, say, I missed it. That's the trade off to the downside protection of this strategy. A 33% gain in 7 months if the stock goes down 20% from here isn't bad.... (Am I the only poster here interested in covered calls?)

IWD
106.68+0.820(+0.77%)Aug 29 4:00 PMEDT