Options Action ReCap
Nothing feels worse than having to leave a party, race home as fast as you can, only to miss snippets of that cable sensation "Options Action" (known within the industry as "The O/A").
Of course, all the segments are available in our rather extensive video archive (no word on when the season one will be released on DVD), but for those who just want the quick download, here's a recap of last week's groundbreaking show.
We kicked it off with a good old fashion tech trade courtesy of Dan Nathan. The man has been scary good when it comes to tech land, but contrary to rumor, he will not be an application on the iPhone. Nathan turned his sights on Cisco , making the case that comments from CEO John Chambers should be a huge catalyst for the stock. However, the direction of that move is less clear, and not knowing which way to place his bet, Nathan took a shot at betting on a volatile move by buying the August 22-strike put and call for a total of $1.50. In order to make money, Nathan needs Cisco to trade either above $23.50 or below $20.50 buy the third week in August. Straddles are notoriously hard to win, and with expiration just three weeks away, Nathan will be on the clock. But given his track record, it's not a stretch to suggest he will cheat time.
Stacey Gilbert - aka, the Frugal Femme Fetal of the options world, was again looking for a discount, this time in retail land. Sensing that this week's same store sales might be a little bit of a yawner, she bought what's called a calendar spread, where she sold the front month option to finance the purchase of a longer-dated one. Specifically, she sold the Abercrombie August 29-strike call for $1.25 to offset the cost of buying the Abercrombie September 29-strike call for $1.80, net net, spending $0.55 to effectively buy the September call in hopes a strong back to school season.
In the award-winning Put Up or Shut Up, which could probably air on pay per view it's so darn good, Mike Khouwand Dan Nathan went at it again, throwing down in a brutal smack down that was so good, reality show producers around the world are green with envy. The issue: P&G earnings. Mike and Dan were similarly bullish, but Mike took a page from Stacey's playbook and decided to be more tactical about it, selling the P&G August 57.5-strike call for $0.75 and using that cash to finance the purchase of the P&G September 57.5-strike call for $1.30, paying a total of $0.55, a bet the really pays off if P&G shares take off later next month. Dan was similarly bullish, but more so in the near-term. He bought the P&G August 55/57.5 strangle, paying $0.85 for the August 55-strike put, and $0.80 for the August 57.5-strike call. His trade is most valuable if P&G stock trades below $53.35, or above$59.15 by August expiration.
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