Trade of the Day: RIMM November $26/$20 risk reversals

The Trade: 
A trader bought 6,000 November $26/$20 bull risk reversals, for an $0.80 debit, or $480,000.

Trade of the Day: General Electric (GE) Bull Risk Reversals

The Trade: 
A trader executed 20,000 November $18/$13 bull risk reversal trades at an $0.11 credit, or $220,000. On Friday, a trader sold 15,000 November $11 puts at $0.23 and bought 10,000 November $18 calls at $0.19, for a $155,000 credit. Another trader sold 22,500 January $11 puts at $0.39 to buy 15,000 January $19 calls at $0.23 for a credit of $532,500.The graph shown below is the November risk reversal.

Trade of the Day: Network Appliance (NTAP) September $39/$33 Bull Risk Reversal

The Trade

Trade executed was the September $39/$33 bull risk reversal 20,000x for a $.08 debit. Profit potential is unlimited. Break even is $39.08.

Shares are down, but have bounced from support near $34 since earnings. Recent large bullish activity seems to suggest the name has bottomed. Just last week you might remember, NTAP was a prior trade of the day.

$13.6B market value, trades 13x earnings, 1.3x PEG, 2.9x cash value and 12x cash flow.

Alternative trade would be the September $33/$31 put bull vertical and the September $39/$41 call bull vertical for a total debit of $.31. Trade offers sufficient profit potential with less risk.

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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.

Trade of the Day: NTAP March $45/$30 bull risk reversal

The Trade:
A trader executed 5,000 March $45/$30 bull risk reversals at an $0.08 credit, or $40,000.

Trade of the Day: Gold (GLD) January $150/June $225 Bull Risk Reversal

The Trade

Trader sold January $150 puts at $2.35 and bought June $225 calls at $6.95 15,000x for a $4.60 debit, $6,900,000 total. Maximum risk is $231,900,000. Profit potential is unlimited.

Chart above graphs profit and loss profile for the trade. Trade is highly bullish and benefits from rise in volatility. Blue line below highlights break even at $187.49.

Alternative trade would the January $145/$150 bull put spread, buying $145 and selling $150, with the June $225/$240/$255 call butterfly. $1.05 debit for butterfly and $.60 credit for put spread, $.45 total debit. Position limits downside risk, while retaining bullish bias with a superior risk-to-reward ratio.

http://seaofopportunity.blogspot.com/*

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.

Trade of the Day: Suncor Energy (SU) Bull Risk Reversal

The Trade:
A trader bought 3,250x December $35/$25 bull risk reversals at $0.56, or $182,000.

Trade of the Day: TBT January $34/$27 bull risk reversals

The Trade
A trader executed 10k of the January $34/$27 bull risk reversal for a $0.25 credit, or $25,000.

Trade of the Day: ATPG Oil and Gas (ATPG) 3 way trade

The Trade
A trader sold 10,000 January 2013 $15 puts for $3.95 and bought the January 2012 $17.50/$30 call spread at $1.05. The trader received a credit of $2.90 or $2,900,000.

Trade of the Day: PetroHawk Energy January $25/$21 bull risk reversal

The Trade
A trader executed the January $25/$21 bull risk reversal 5,000x for a $0.77 debit, or $385,000.

Options 101: The Risk Reversal

A risk reversal consists of buying an out of the money call and being short an out of the money put, both with the same expiration month.

Risk reversals are used when the investor has a market opinion. For example, if the trader is bullish, another option besides going long the stock, would be to buy an out of the money call option, and simultaneously sell an out of the money put option. The money he receives from the sale of the put option would finance all or part of the purchase of the call options. Then as the stock goes up in price, the call option will increase in value, and the put option will decrease in value.

Trade of the Day: Williams Co. August $30/$27 bull risk reversal

The Trade
A trader bought 7,500 August WMB August $30/$27 bull risk reversals at $0.65.

Trade of the Day: January 2013 $20/$10 bull risk reversal

The Trade:
A trader set up the January 2013 $20/$10 bull risk reversal 10,000x at $0.23.

Trade of the Day: Bank of America August $13/$10 bull risk reversal

The Trade:
A trader put on a bull risk reversal using the August $13/$10 options for a 1 cent credit, 4,700x.

Trade of the Day: EnCana October $34/$27 bull risk reversal 10,000x

The Trade
A trader put on the October $34/$27 risk reversal for 10,000 contracts at a $0.90 debit.