CLOSING THE $ZNGA OptionsAction trade - mike

15jun -not surprised OptionsAction did not revisit this stinker of a trade. not good way to attract viewers with big losers.. remember that other ZNGA clip where a caller did similar thing and they were yucking it up on the desk about it. not laughing too much now. this put sale for .50 can now be bought back at 1.70 so a loss of 1.20 per contract unless for some reason you want to be put the stock at 7 for some type of tax strategy. mikes on air trades in google docs spreadsheet


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14may - on fridays show, mike has a trade on ZNGA..."selling a put" here is the video clip ZNGA clip

Sell the June 7 put for .50 ($50)

was touched on briefly in the lead in. for every Put you sell you will have to set aside about $700 in buying power/margin incase you have to actually buy the stock at 7 (get put the stock). You will keep that $50 so your cost basis will be $6.50 if that happens at June opex. So for a 10 lot you have to set aside $7000 while collecting $500 credit.  while i dont follow ZNGA, if your thesis is that you have caught the falling knife and it will reverse from here on the facebook coattails then an alternative is to do a "call spread risk reversal"

Sell the June 7 put for .50
buy the jun 8/10 call spread for .50ish

might get a lucky fill and put this on for zero cost...for a 10lot with same margin set aside requirement, your max profit is the 8/10 call spread of $2000 vs just the $500 on the cash secured put