I've been looking around for potential stocks to use my High-Strike-LEAP-Straddle-Sale strategy. ADBE looks good. Check out the chart:
Adobe Daily Chart
The play is SELL -1 ADBE Jan 10 30 Straddle 14.00. Here's the risk profile on ToS:
Adobe Risk Profile
Delta: 18.45, Gamma -5.66, Theta 1.18, Vega -16.90
This puts your effective basis at expiration at 16, and it's pretty easy on the margin. Breakeven points are at 16 and 44-ish. Here's where that is on the chart:
Area of Profitability at Expiration
Now ADBE can go lower, and it's good to manage risk, but this is a good, long-term play to stick in your IRA and forget about. Owning Adobe at 16 a share isn't bad either. As for other strategies, you could do an ITM put sale way out here, but your basis doesn't get reduced as much so there's more money to tie up. You could also do an ATM leap calendar strategy, but that requires a lot more trading around it and if you don't have a good commission structure you can get chopped up in the trades.
What do you think? Good play or not?
Yep, I'm still around. I'm working on a top-secret underground project, and the videos should be back hopefully on Monday.
And to give you some satisfaction, here's a play:
A whale came out in TXN and sold 2100 Jan 10 25 strangles at about 10.60. GREAT play for long term. you're profitable between 14 and 36. Owning TXN at 14 is a decent value and there's little chance that the stock will double to 36 in 13 months. Max gain is around the 25 strike.
So the whale has a max profit of 2.2 million dollars.
This one's a table thumper.
The S&P futures have been giving out some very good singals in terms of supply and demand. If you are a short term trader, here's what to keep an eye out for:
ES Futures Supply and Demand
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