Friday
Apr282006
(PG) Portfolio Trade - Procter and Gamble Earnings Strangle
April 28, 2006 at 3:41 PM
Procter and Gamble (PG) (stock reference $58.20)
Bought May 55 Puts
Bought May 60 Calls
Paid $0.45 per share
P & G annouces earnings next week on May 3rd. I don't have much of an opinion on what earnings might be but I don't want to be left out of any big move. And since option prices are so low lately and I love buying when others are selling, I picked some up cheap. I view this option trade as a speculative bet. The implied volatility of this option strangle is around 17.
Links to Educational Sites to explain this strategy:
Options Basics
Definition of Put
Definition of Call
Definition of Strangle
I also love Yahoo Finance Options Tools for most things educational:
Disclosure:
I own Procter and Gamble (50% of Max Position size).
I have sold short short Jan 2007 Long Term 50 Strike Puts (I would buy the stock at that price).
I own the above strangle. I have a GTC sell order for 50% of each leg of the strangle at $1.00. Just in case a sudden move happens and I'm not around.
All else equal, I would buy more PG if it fell below $55. I think the stock valuation is a bit too high to buy but not high enough to sell and trigger a capital gain payment.
Bought May 55 Puts
Bought May 60 Calls
Paid $0.45 per share
P & G annouces earnings next week on May 3rd. I don't have much of an opinion on what earnings might be but I don't want to be left out of any big move. And since option prices are so low lately and I love buying when others are selling, I picked some up cheap. I view this option trade as a speculative bet. The implied volatility of this option strangle is around 17.
Links to Educational Sites to explain this strategy:
Options Basics
Definition of Put
Definition of Call
Definition of Strangle
I also love Yahoo Finance Options Tools for most things educational:
Disclosure:
I own Procter and Gamble (50% of Max Position size).
I have sold short short Jan 2007 Long Term 50 Strike Puts (I would buy the stock at that price).
I own the above strangle. I have a GTC sell order for 50% of each leg of the strangle at $1.00. Just in case a sudden move happens and I'm not around.
All else equal, I would buy more PG if it fell below $55. I think the stock valuation is a bit too high to buy but not high enough to sell and trigger a capital gain payment.
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