Thursday, August 11, 2011

Trade of the Day: Qualcomm September $55/$60/$65 call butterfly spread

The Trade
Trader executed the September $55/$60/$65 call butterfly spread 5,000x for a debit of $.39, $195,000 total. Maximum risk is equal to the total debit. Profit potential is limited to $2,305,000.

Currently, the position is positive gamma as it is looking for a big move to help shares settle slightly above $55 and below $65. Moreover, passage of time, or theta, will lower the value of the spread.

The daily chart above depicts the profit zone for the spread. A retest of yearly highs near $60 is the optimal scenario.

*Special thanks to Option Radar, BMO Capital, MEB Options, Bloomberg, Reuters, Optionistics, LiveVolPro, CBOE, AMEX, Option Monster, T.O.P. group, and all of the options desks and traders we work with to provide the option flow!

No position at this time. Position declarations are believed to be accurate at time of writing but may change at any time and without notice.

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