Friday, March 23, 2012

$LGF Options Action Hunger Games trade

23mar2012 - mike khouw had the following put calender trade on LGF:

Sell the Apr 13 put for about .60
buy the May 13 put for about .90
for total debit of about .30 ($30 for one lot)

he is making this a directional trade. i like the trade mainly that you only risk the .30 . have to admit i dont know much about the stock outside of the constant cnbc Hunger Games blabber and Mad Men. I have another suggestion if you want to do this for protection, as in you hold the stock and dont want to sell just yet and expect a near term pullback.. a "put spread collar":

Sell the Apr 15call for about .95 credit
Buy the Apr 15put for about 1.45
sell the Apr 13 put for about .50 credit
If you enter as a 3leg trade you may get this filled for zero. do a lot for every 100shares you own

Your max gain is the $2 wide put spread, so $200 for every lot. You can see the put spread is already in-the-money.  Looking at the chart you can see all the volume this week thanks to cnbc, with corresponding spike and pullback. Also $13 seems to be some support from prior to the cnbc plugs, $13 being the bottom of our put spread / and our max profit target.

So again, for zero cost you can put on a $200 protection trade while giving you a little more upside up to $15 level. I would put this on if i was long stock and wanted to hold it.

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