The LEAPS Trader
105 W. Monument Street
Baltimore, MD 21201
Wednesday, June 14, 2006
Email – #321
** Volatility = ProfitsOur VIX trade (VIX BC) is up over 50% based on the midpoint of the bid and offer today. But, just like the VIX, this trade is volatile and there is only one market maker for the options. We don’t want to give back all of our hard-earned profits here. So, here’s what you should d
Sell the VIX BC at current levels and lock in your profits.
OR, for those of you who like spreads, here is a chance to take all of your money off the table and still have a $2.50 upside. Here’s what you should do if you want to leg into this spread and virtually guarantee your profit:
Sell the VIX BW (February $17.50 call options) against your position. These are currently trading at $2.80 on the bid, returning you all of you capital, and maybe more for those of you who bought at $2.60.
Your equation for this spread would be as follows: $2.70 invested, minus $2.80 return of capital for a cost of $-.10 with an upside of $2.50 at expiration if the VIX BW closes at $17.50 or higher.
Again, you have two choices, either sell at current levels and book 50% profits, or enter into the spread describer above.
Good trading,
Karim
Current Portfolio:
Company / Symbol: CBOE Volatility Index (WCB: ^VIX)
Option / Symbol: Feb. 07 $15 call (VIX BC)
Date Purchased: 5/3/06
Current Price: $3.90
Comment: See instructions above.
Company / Symbol: sanofi-aventis (NYSE: SNY)
Option / Symbol: Jan. 08 $60 call (WFK AL)
Date Purchased: 4/17/06
Current Price: $2.35
Comment: Hold.
Company / Symbol: Boston Scientific (NYSE: BSX)
Option / Symbol: Jan. 08 $30 call (WBX AF)
Date Purchased: 2/27/06
Current Price: $1.05
Comment: Hold
Company / Symbol: Microsoft (Nasdaq: MSFT)
Option / Symbol: Jan. 08 $30 call (WMF AF)
Date Purchased: 8/8/05
Current Price: $0.75
Comment: Hold.
Company / Symbol: S&P 500 MITT (AMEX: MCP)
Date Purchased: 7/18/03
Current Price: $11.07
Comment: Hold.
Bull & Bear Spreads
Company / Symbol: GoldCorp (NYSE: GG)
Option / Symbol: Jan. 09 $30 call (OPJ AF)
Date Purchased: New
Current Price: $8.50
Comment: Hold.
Company / Symbol: GoldCorp (NYSE: GG)
Option / Symbol: Jan. 09 $40 call (OPJ AH)
Date Purchased: New
Current Price: $5.50
Comment: Hold. Sold call against January 09 $30 position.
Company / Symbol: Teva Pharmaceutical (Nasdaq: TEVA)
Option / Symbol: Jan. 08 $40 call (WTX AH)
Date Purchased: 5/23/06
Current Price: $4.60
Comment: Hold.
Company / Symbol: Teva Pharmaceutical (Nasdaq: TEVA)
Option / Symbol: Jan. 08 $45 call (WTX AI)
Date Purchased: 5/23/06
Current Price: $2.90
Comment: Hold. Sold call against January 08 $40 position.
Company / Symbol: Chesapeake Energy (NYSE: CHK)
Option / Symbol: Jan. 08 $35 call (WZY AG)
Date Purchased: 4/25/06
Current Price: $3.65
Comment: Hold.
Company / Symbol: Chesapeake Energy (NYSE: CHK)
Option / Symbol: Jan. 08 $45 call (WZY AI)
Date Purchased: 4/25/06
Current Price: $2.00
Comment: Hold. Sold call against January 08 $35 position.
Company / Symbol: Nasdaq 100 Trust (Nasdaq: QQQQ)
Option / Symbol: Jan. 07 $42 put (VCQ MP)
Date Purchased: 2/1/06
Current Price: $4.90
Comment: Sell if the QQQQs CLOSE above $38.
Company / Symbol: Nasdaq 100 Trust (Nasdaq: QQQQ)
Option / Symbol: Sell Jan. 07 $38 put (VCQ ML)
Date Purchased: 2/1/06
Current Price: $2.40
Comment: Buy back if the QQQQs CLOSE above $38.
Company / Symbol: Energy Select SPDR (AMEX: XLE)
Option / Symbol: Jan. 07 $39 put (ORJ MM)
Date Purchased: 3/1/05
Current Price: $0.75
Comment: Hold.
Company / Symbol: Energy Select SPDR (AMEX: XLE)
Option / Symbol: Sell Jan. 07 $37 put (ORJ MK)
Date Sold: 3/30/05
Current Price: $0.25
Comment: Hold. Sold put against January 07 $39 position.
