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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
