once again, you buy the lower strike price at the ask
sell the higher strike price at the bid....
Of course, the market maker tries to cheat you but since this is only a survey...go ahead and use their numbers
If the number is above $3.80 this is showing relatively good support.
spend some free time looking at these compared to the Jan 2016 call spreads, as well.
Do not take a position yet...not because of volatility but time
WE are two for two this year.
Will be go three for three or will it be like MEATLOAF sings.."Two out of three ain't bad!"
Stay away from gold
Call Spread is when you buy a lower strike price then sell a higher strike price . Then you subtract that from strike price spread, in this case $10 to determine potential profit.
Then you take that profit over cost.
Here is an example:
$110 calls cost $27.45
$120 calls can be sold for $19
Difference of $8.45
Spread is $10 ...so $1.55 potential profit...
Return: $1.55/$8.45 = 28%
If the see-saw has been to $130....
Dow Futruers are UP 150 +
This hedge puts money in your pockets rather than buying puts that take money out
almost 100,000 contracts in each: Jan 2016 $120 and $130 calls
The 99,000 $130 calls SOLD at $11 - $12 are already PROFITABLE $50 million. No one is closing down this trade. Why? Happy to keep the tax deferred no interest cash in their pockets and will walk away at $130 + $11 = $142-
I never said to sell the $120 calls
over 99,000 contracts = 9.9 million shares have pocketed $100 million to date
Since Feb I have shown how the sellers of the Jan 2016 $130 call for $11- $12 today have made $5+
all $11 to $12 has been an interest free tax deferred self imposed dividend.
Now this gave a $11+ hedge as well as $11+ upside