Options Action Recap: Short Gold and Microsoft
Two trades. Two bearish calls. But that’s where the similarities end from Friday’s show.
We’ll kick it off with the simpler of the two trades.
According to Oppenheimer’s Carter Worth, gold’s days of glittering are numbered. And with the commodity seemingly ripe for a pull back, CRT Capital Group’s Mike Khouwsuggested a simple way to play for a pullback: buy puts on the SPDR Gold Shares Trust , the ETF that tracks gold.
Specifically, he suggested buying the GLD May 160-strike put for $2.75, a trade that is profitable if the GLD is below $157.25 by May expiration.
Trade and breakdown are below.
MIKE’S GLD OPTIONS CHAIN
- BUY THE MAY 160-STRIKE PUT FOR $2.75
HOW MIKE’S GLD TRADE MAKES MONEY
- LOSSES ABOVE $157.25
- PROFITS BELOW $157.25
Our other trade centered on tech highflyer Microsoft (BTW, when was the last time anyone called the software giant a “highflyer”?)
According to Dan Nathanof Riskreversal.com, the run by Mr Softy has been a little too fast, and a little too furious, with the stock now representing 6% of the tech heavy Nasdaq. As a play for a short-term pull back, Nathan suggested buying the MSFT April 31/29 put spread for $0.40. His trade and breakdown are below.
DAN’S MSFT OPTIONS TRADE
- BUY APRIL 31-STRIKE PUT FOR $0.60
- SELL APRIL 29-STRIKE PUT FOR $0.20
HOW DAN'S TRADE MAKES MONEY
- LOSSES ABOVE $30.60
- PROFITS BETWEEN $30.60 - $29.00
- PROFITS CAPPED $29.00
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