quietly the XME has broken out of a 2017 lull, and with that we go long..
a few ideas how to play this
1. Poor Mans Covered Call
2. Sell puts..
Both situations seem decent, but if you look at the possibility of being wrong, the PMCC offers the least amount of pain and suffering. Lets explore
if selling puts, using Delta30... we will be getting $53 and using 989 in margin for Feb 02 34 Puts... The key here is that 34 is the prior resistance/ now support...
if buying a PMCC
Sell 1 contract of XME 2018 19-JAN 36.00 CALL @ $0.45
Buy 1 contract of XME 2018 15-JUN 34.00 CALL @ $3.00
Current Stock Price : $35.22
Break Even #1 : $34.58
Break Even #2 : $40.25
Total Requirement: $254.50
Put Guarantee Price: $0.00
Max Risk: $254.50
% Max Risk: 100.0%
Max Profit: $90.00
% Return: 35.4%
I will be using the PMCC model, as it will allow a greater return, and less pain if wrong... also the possibility to continue writing calls for 6 more months
a few ideas how to play this
1. Poor Mans Covered Call
2. Sell puts..
Both situations seem decent, but if you look at the possibility of being wrong, the PMCC offers the least amount of pain and suffering. Lets explore
if selling puts, using Delta30... we will be getting $53 and using 989 in margin for Feb 02 34 Puts... The key here is that 34 is the prior resistance/ now support...
if buying a PMCC
Sell 1 contract of XME 2018 19-JAN 36.00 CALL @ $0.45
Buy 1 contract of XME 2018 15-JUN 34.00 CALL @ $3.00
Current Stock Price : $35.22
Break Even #1 : $34.58
Break Even #2 : $40.25
Total Requirement: $254.50
Put Guarantee Price: $0.00
Max Risk: $254.50
% Max Risk: 100.0%
Max Profit: $90.00
% Return: 35.4%
I will be using the PMCC model, as it will allow a greater return, and less pain if wrong... also the possibility to continue writing calls for 6 more months