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BAC IV Speculative trade - Learn to Trade Options | #1 Options Trading Education

BAC IV Speculative trade

Published on August 23, 2007

BAC IV Speculative trade

August 23, 2007

screenhunter_01-aug-23-2319.gifI mentioned earlier that I am looking for IV rise in BAC. IV for BAC had earlier risen to 30%, then quickly dropped to 20s which is still about 5% higher than mean.

However, due to $2billion funding to CFC, I am expecting a rise in IV, for short-term period. It may not happen and that’s why it’s a speculative trade vs an Income trade.

bac-double-calendar.pngIdeally I was looking for a double diagonal but I couldn’t find one with good risk/reward hence opened a double calendar. It may or may not happen but here is a trade that i am placing for it. If IV doesn’t increase and BAC remains between 48 to 57, this trade will be profitable and maximum profit points are 50 and 55 that are expected to deliver over 50% gains in less than 4 wks time.

Sell 50 and 55 sept puts and buy Nov 50 and 55 puts for a total debit $1.00 per spread.

Profitable trading, OP


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