Bought 2 Months volatility on Industrials: XLI AUG $36/37 Strangle for $1.73 (4.6%)
Betting on Industrial stocks will move on ISM release this friday .
bought august strangle on XLI (industrials) for $1.73 (4.6%)
Catalysts in upcoming 3 days:
Thursday 8:45 AM EST : Chicago PMI
Friday 6:50 AM EST : Japan Tankan
Friday 9:00 AM EST : ISM Mfg Index
Bought RIMM May11 $60 Call for 0.30.
Bought May11 AMD $8 Put @ $0.16
Sold BRCM May 2011 $40 CALL @ 62 cents
one month Vol's up today,
May $40 Call's IV up 2.60%
sold some May calls to hedge up our synthetic long done a while back
expecting a short term downturn but still maintaining long term upside exposure
Bought January 2012 Synthetic Long on Broadcom (BRCM) at $45 strike. Bought Jan 2012 $30/60 Risk Reversal as well
Trade Reasoning:
Takes advantage of leveraging by doing a synthetic instead of just longing the actual stock.
Choosing OTM Call (ATM Put) is because we are bullish and that way we would be receiving net credit of the whole trade. The payout is very similar if we choose ATM Call (OTM Put) strike at $40 for a net debit.
Buying a Risk Reversal because we believe it will not go above $60, and giving us a downside protection at $30.
Breakdown of the trade:
Synthetic Long :
Bought Jan12 $45 Call @ $3.38
Sold Jan12 $45 Put @ $7.58
Risk Reversal:
Bought Jan12 $30 Put @ $1.46
Sold Jan12 $60 Call @ $0.52
Net Credit : $3.26
Bought Sept 2011 $60 / $52.5 Put Spread on Research in Motion @ $2.80, delta:16 vol:39%, bought underlying at $62.03 to be delta neutral.
RIMM earnings tomorrow, wants to get some downside exposure.
April's vol is pretty elevated at 50ish …
the September 60/52.5 put spread seems pretty reasonable at 4.5%
compared it with June 60/52.5 put spread costs 4% @ 45vol, we decided to buy the September Spread, which gives us more time to trade around with it..
Covered more delta for AMD @ $8.23, to maintain Delta Neutral after big drop today
covered more delta for our $9 Put that is expiring this friday.
Bought more AMD at $8.23 to maintain Delta Neutral after big drop today
Delta Hedge… bought AMD at 8.64
to delta hedge our March $9 putBought AMD March11 $9 Put at 33 cents
not a believer in the m&a rumour… but dont wanna get short squeeze by shorting either…
buying a 1 month put is the only solution to get downside exposure with limited risk
