Wednesday, June 13, 2012

What to do with a worthless Ratio Spread $FFIV

in the Paper Trade Portfolio trade for FFIV FFIV trade i have a Leap and a Jun105/110 call ratio spread..the ratio spread is worth essentially zero and you might wonder what to do with it with stock at 101ish. with 2days to go till opex, again..just this ratio profit range is from 105-115.

so right now the ratio spread is worth about zero, the same as it would be on opex if stock stays below 105, so you would not be losing any money by holding. but on the flip side, we have all seen some crazy 1-2 day moves, say the stock rallies 7-8bucks the rest of the week on some good news..EU, stock specific, go from a worthless ratio to one that is near max profit of $500 per you have no downside to just sitting tight and seeing if stock rallies a bit in order to get a profit out of it. you can then put on a new trade on monday, with 5+ weeks till july opex, the pricing will not be significantly different from today to monday if you are looking at doing another ratio spread into earnings for FFIV for july.

gotta hold those ratios all the way to opex day to realize the near max potential profit..dont screw up the strategy by jumping out too soon

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