Stock / Symbol: Boeing / BA
Strategy: [private_monthly]Condor [/private_monthly]
Price at trade post: $74
Reasoning: Despite the mechanical issues surrounding their new 787 Dreamliner, I think that BA will stay within a range of [private_monthly]67.5 to 80[/private_monthly] by February option expiration. I'm going to play my thesis with a [private_monthly]call condor [/private_monthly]+ protective strangle . This trade has a delta of -12.5, a positive theta of 1.8 and a negative vega of -8.6. The probability of success on this trade is 73%. If BA trades [private_monthly]down to $69.50 or up to $78,[/private_monthly] we'll either stop out of the trade or adjust the position. The earnings report on the morning of Jan 30th could be an issue, which is why I've added the protective strangle. Depending upon conditions, I may exit this trade the day before the earnings announcement.
Trade Details:[private_monthly]
BTO 4 BA Feb13 67.5 calls
STO -4 BA Feb13 70 calls
STO -4 BA Feb13 77.5 calls
BTO 4 BA Feb13 80 calls
for a max net debit of $1.80 per contract (day order, limit order). Try for the mid +0.02, the mid is currently at $1.78. If not filled today, ok to try again tomorrow.
Then, once filled on the condor:
BTO 1 BA Feb13 80 call
BTO 1 BA Feb13 67.5 put
at the market
Requirements:
Cost/Proceeds $792
Total Requirements $792
Estimated Commission $27
[/private_monthly]
Max Risk: $792
Max Reward: $200 or 25% [private_monthly]by Feb 15
Max Profit Range: $70 - $77.50
Suggested Downside stop: @ $69.50
Suggested Upside stop: @ $78
[/private_monthly]
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