Stock / Symbol: Cliffs Natural Resources / CLF;
Option Strategy: [private_monthly]butterfly call spread[/private_monthly];
Price at trade post: $16.25;
Reasoning: Putting a trade on CLF with an upside bias using a [private_monthly]butterfly call spread[/private_monthly]. The probability of success on this trade is just 30% but it's got a good risk/reward ratio. The greeks on this trade are: 43 delta, -0.12 theta, and 0.01 vega. Theta will turn positive should CLF trade higher. Looking to exit the trade between 17.5 and 18.5 on CLF.
Trade Details:[private_monthly]
BTO 2 CLF JulWk4 16.5 calls
STO -4 CLF JulWk4 19.5 calls
BTO -2 CLF JulWk4 22.5 calls
for a max net debit of $0.70 per contract (day order, limit order). The mid is currently at $0.64. If not filled today, it's ok to try again tomorrow.
Requirements:
Cost/Proceeds $140
Option Requirement $0
Total Requirements $140
Estimated Commission $12
[/private_monthly]
Max Risk: $140
Max Reward: $400 or 285% (at current volatility levels) @ [private_monthly]$19.50 by Jul 26[/private_monthly]
Profit Range: $17.25 to $21.75 by Jul 26
Suggested Upside stop: @ 19.50
Suggested Downside stop: @ 15.49
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