Trade Ideas

[positivecashflow]

Your idea guys on possible option trade?

TLT - Last Price 94.86
Target Price 97.94
Target Date 14/07/2005

chains can be found on http://www.cboe.com/DelayedQuote/QuoteTable.aspx

IV: see chart below

 

[wayneL]

calls @ 7% IV
puts @ 14% IV

To take advantage of the non parity we can use the EFT(stock)

A reversal would be a risk free trade

short EFT
sell $96 july/aug puts
buy $96 july/aug calls

in equal position sizes....capital intensive but risk free

Another risk free alternative is a synthetic vertical

short EFT
sell july/aug $97 calls
buy july/aug $95 puts

Again capital intensive but risk free....more profit at target price

Otherwise, calls are that cheap, a straight out buy would be OK

Would not sell puts naked as a surprise to the downside would hurt...and...are the put IV's saying something? What if the Fed surprises with a bigger hike? Tankage!......Much much less risk than an ordinary stock though.

Cheers