Month: March 2016

Today in Finance Club, we decided that eBay looks like it is “going to move,” and one of the ways to play that is through a long strangle. This is a risky trade, and will probably go against us, but since this is paper money, we will place it and track it for the learning. This is the trade:

• Bought 1 of the March 18th 2016 24 Calls for $0.46
• Bought 1 of the March 18th 2016 23 Puts for $0.31

This results in a net debit of $0.77, for a maximum loss of $77 and an unlimited maximum profit.

– Michael and Nolan

Today in Finance Club, we placed a new trade on International Paper. We sold a call spread on IP, with a bearish thesis that IP will remain below $38.25 by March 18th. The trade is as follows:

• Sold 3 of the March 18th 2016 38 Call for $0.35
• Bought 3 of the March 18th 2016 39 Call for $0.10

This is for a net credit of $0.25, with a maximum profit of $75 and a maximum loss of $225.

– Michael and Nolan

In the club today, we also closed our XLU call spread for a profit. XLU, even though it was up today, has remained below our thesis price and decreasing volatility and time decay have really helped us in this short trade. We bought back the 48 call for $0.08 and sold the 49 call for $0.02, resulting in a profit of $0.16 or with 5 contracts, $80.

– Michael and Nolan

In the club today, we closed our put spread on XLE by buying back the 53 put for $0.17 and selling the 52 put for $0.12, resulting in a net gain of $0.17, which with 6 contracts would be $102.

– Michael and Nolan