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