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Manhattan IBD Meetup

Manhattan IBD Meetup

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Manhattan IBD Meetup

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  1. Manhattan IBD Meetup 4/21/2010

  2. Agenda • Announcements and introductions - Avi - 10 mins • Sage Session - What I learned from 3 years of IBD meetups - Cynthia Kienzle - 20 mins • Sage Session - Continuing the option education - call and bear spreads and cash neutral option positions - Avi Fogel - 20 mins • Sage Session - Comparing Darvis and O'Neill - Jim Duggan - 30 mins • Hit List - My trading strategy and process - Levi Lauvray - 15 mins • Hit List - How I build watchlists - Richard McKay - 15 mins

  3. SAGE SESSION Options – buying bull spreads and cash neutral option strategies Avi Fogel, 4/21/2010

  4. Selling Puts – last month’s Sage • On 2/5/2010 • AAPL @ $192 • Jan ‘11 $175 PUT - $20.5 • Sell (short) 10 contracts of $175P – proceeds: $20,450 • Upsides: • Get cash for long transactions • If, as assumed, stock goes up by expiration – keep it • Downsides: • Need $175,000 available in case of exercise • Need to buy if stock drops and you get PUT the stock

  5. Buying spread– this month’s Sage • On 2/5/2010 • AAPL @ $192 • Jan ‘11 $175 PUT - $20.5 • Jul ‘10 $230 CALL - $6.50 • Jul ’10 $240 CALL - $5.00 • Bull spread = Buy $230C + Sell $240C at the same time, delta is $1.50 per spread • Upsides: • Stock goes up - you can make as much as 660% • Downsides: • Stock drops – you lose investment

  6. Combination– this month’s Sage • $20,450 in proceeds from $175P • Bull spread = Buy $230C + Sell $240C at the same time, delta is $1.50 per spread • Buy 130 contracts of the spread (13,000 shares!) – for $1.5 x 130 x 100 = $19,500 + 2 x $0.75 x 130=~$19,700 • Status today: • 10 X $175P = ($3,500) = $3.5 x (-10 x 100) • 130 x bull spread = 130 x 100 x $7.8 = $101,400 • Total = $101,400 - $3,500 = $97,900