Buy the Jan 50/55 call spread for 1.40
as melissa points out mikes lack of enthusiasm , i doubt he is doing this trade for real. but an ok trade, defines the risk, goes out a few months. dan makes some good points about volititity.. in his GS trade in the same show he said GS vol was "pumped" with only a 6point spreads.. in this case its accurate with oct IV near 65 and Nov near 34. so he mentioned a calender spread instead.. i might be looking at that myself on wednesday.. the options right this second with stock at 47ish are pricing in about at 3dollar move on earnings.. that gets you to near 50.. so will be looking at the 50 oct/nov call calender which are going for near .50 cents.. so really if you had that cash to commit to a trade.. the 1.40 per lot for mikes trade.. you could commit nearly the same amount and get three calender spreads instead . the risk/reward per trademonster analyse tab on the calenders are 1 to 2.62. the idea being if stock moves towards 50 the Oct call decays rapidly and much more than the Nov 50 giving you a profit. see all of mikes on-air trades in this google docs spreadsheet
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