4may - Options action revisited this trade tonight, carter worth says its going to stop going down right here and mike is sticking with it because he test drove an electric car.. yup.. theres the rational. dan hammers him again, and i still dont like it.i dont see anything on the chart that makes me say it will go up from here. i actually chuckled, yes i chuckled, not LOL'd, watching the Optionsaction lead in to this trade.. the enthusiastic way melissa lee said you can make money if it goes up , down or sideways... yeah, 20cents for a one lot, thats $20 bucks.. $200 bucks for a 10lot but having to set aside $11000 in buying power till july.
heres the video clip from the show tonight --->>>Called out
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4/20 -another odd selection my mike. with stock at 11.40 a risk reversal, here is the video video clip
Sell the July 11put for .40
Buy the July 13call for .20 for credit of .20 ($20 per onelot)
Dan does a good job of hammering mike about the trade. mike salvages his explanation by including that this is an alternative to just buying the stock here and he is willing to buy the stock at $10.80. My usual comments about risk reversals are the information not presented on-air.. this is not a free trade, you have to set aside buying power to actually buy the stock at 11 , so for every lot you need $1100 buying power. So for 10 lot its $11000. Also comments about "you may get put the stock" or "you may have to buy the stock" if it drops below 11 are misleading... this will happen IN JULY AT OPEX not now.
First my alternative if i was to do this, say for a 10 lot.. instead of getting a .20 credit, ie $200 for a 10lot, which on $11k is chump change to have to wait till July. do a 11/12 risk reversal. (after hours quote is in my favor but ill stick with mikes put price:
Sell the July 11put for .40
buy the July 12 call for .40 for a no cost risk reversal
look at chart below, there is some decent resistence at 13 (mikes call strike) so i dont want to mess with that if i can avoid it. i also dont understand the timing of wanting to go long this stock, even though he said the trade is an alternative to going long. stock lost its 200day today.. maybe some support near 10. A risk reversal would make more sense to me at 10 not today. so if stock gets stuck at 13, mikes call is worthless and just collects the 20cents for 3months vs a 12call from my RR then get a $1 profit on the call.. i wouldnt do either trade, just dont like the sector. if you are interested in sector revisit this closer to 10 if at all.
