Потребителски вход

Запомни ме | Регистрация
Постинг
12.08.2016 07:27 - Overbought Cisco ripe for a small correction
Автор: goro82 Категория: Бизнес   
Прочетен: 158 Коментари: 1 Гласове:
0



imageimage



Гласувай:
0
0



Следващ постинг
Предишен постинг

1. goro82 - Background After a nice ride ...
12.08.2016 07:28
Background

After a nice ride from 27.13 on June 27 to a high of 31.25 on August 9 Cisco is now overbought and ripe for a small correction. Stochastics, RSI and MACD are giving us a selling signal.

Let’s buy the Sep16 (expiry September 16) 31/29 put spread to play a retracement to 29.68 (38.2% of retracement of 27.13/31.25).

Management and risk description

For a $20,000 trading account, we would invest no more than 2% of the account value or $400 on that trade in order to respect some strict money management rule.

Entry: buy CSCO Spe16 31/29 Put Spread at $0.64.

=> buy CSCO Sep16 31 Put at $0.88

& sell CSCO Sep16 29 Put at $0.24

Maximum Profit at expiry is limited

Maximum profit at expiry achieved when underlying price =< short strike price
At expiry maximum profit = Long strike price minus short strike price minus premium paid
= 31 – 29 – 0.64
= 1.36
One put spread worth $0.64 X 100 shares = $64
As we can invest no more than $400 on that trade (2% of the account value) we will buy:
$400/$64 = 6.25 or 6 put spreads
For 6 CSCO Sep16 31/29 put spreads we invest $384 ($0.64 X 100 shares x 6

put spreads) to realise a profit of $816 ($1.36 X 100 shares X 6 put spreads) if the market closes at or below 29 at expiry.

Return on Investment if the market closes at or below 29 at expiry

= Profit/Premium X 100
= $1.36/$0.64 X 100
= 212.50%

Maximum loss

Maximum loss is limited to premium paid
Maximum loss is $0.64 or $384 for 6 Put Spreads.

Breakeven point at expiry

Long Strike – Premium Paid
$31 - $0.64 = $30.36

Target: 29 or below

Time horizon: 36 days
цитирай
Търсене

За този блог
Автор: goro82
Категория: Бизнес
Прочетен: 161150
Постинги: 1295
Коментари: 1160
Гласове: 116
Архив
Календар
«  Септември, 2018  
ПВСЧПСН
12
3456789
10111213141516
17181920212223
24252627282930