CLOSING the $BBY Options Action trade - mike

24aug - Options Action revisits one of mikes trades that goes to Jan2013, heres the video clip BBY clip..if mike actually did put his money where his mouth was and put the trade on prior to the show during the trading day he might have had a quick profit since the stock popped the following monday after the show aired (before joe six-pack could put on the trade), this risk reversal that mike featured last month for a 25cent credit can now be closed at 2.47 debit... so about a 9x loss.. see how sneaky options action is.. by saying its only a loss of $200..yeah, true..thats per lot but still you lost 9x what you got for a credit. so mikes taking the loss.. Carter Worth cant say the "L" word and instead says to walk away. alternatives to "walking away"... as a minimum close out the put for starters. You can keep the 24call as a lotto ticket or keep it and sell near term options against it (calenders)..the DEC 24 is going for about .45... that brings the cost of the Jan2013 call down alot based on what you would get by closing it outright. never know, maybe the buyout does happen. see all of mikes on-air trades in this google docs spreadsheet

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29 Jun - Carter Worth if you will notice in the clip is trying to use fundamental reasons for recommending a buy vs technicals. leads off with a multiyear chart showing a downtrend then starts talking non TA metrics.. when a chart lover trys to validate a stock call based on fundamentals vs just charts (regardless if you somehow put fundamentals into a chart format) that makes me not want to be in it.. here is the video clip, BBY clip . remember how some people say to focus on stocks where there charts go from lower left to upper right.. well this is the opposite.. you might catch a bottom here or get a quick trade but with so many other stocks actually moving up i would not be messing with this.. focus on the leaders in their segments. mike is doing a risk reversal.. i like risk reversals but prefer to do them on 1. stock i actually want to own if it came to that 2. do risk reversals more near term . this trade and mikes other on-air trades in a google docs spreadsheet

Buy the Jan2013 18/24 risk reversal (sell the 18put, buy the 24 call) for .25 credit


not mentioned in this discussion is that Yes, you  get .25 credit.. $25bucks per lot, but its not a free trade..since you are selling that put you have to set aside buying power/margin to buy the stock at near 18 if you still hold that put at opex..so figure about $1800 per lot.. stock might catch a rally and call increases and puts decrease, ie profits to you.. but like scott said, i dont want to sell puts in a name i dont want to own..might work out but im not interested. plus if the stock stays range bound you are committing that $1800 for half a year... if anything id go front month or next month.. and make it a call spread risk reversal.

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