BAC IV Speculative trade

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







8 responses to “BAC IV Speculative trade”

  1. […] To see how this trade progresses, please view the comments below this post or subscribe to the comments RSS feed. (In this case, also check OP’s comments on his trade: […]

  2. OptionPundit Avatar

    As of market opening on Aug 24th, The trade is already up +10%.

  3. OptionPundit Avatar

    Well as expected BAC is falling, slowly and IV is rising. As of this writing, the trade is up close to 10%.

  4. […] shared a BAC trade about 2 wks back, the trade has resulted in beautiful returns. As of y’day close, the trade […]

  5. OptionPundit Avatar

    I sold my Sept/Nov 55 put calendarf for $0.15/trade vs cost price $0.20. Net, it was sold at a $0.05/trade loss. As of Y’day closing the remaining leg i.e. Sept/Nov 50 Put Calendar is selling for $1.10 vs cost of $.80/trade.

    Net the trade is up $1.10+$0.15=$1.25 vs $1.00 cost i.e. 25% profit !!

  6. […] $100 credit and $200 price reduction, it’s messy). Looking forward to reap benefits today. Check out my update on BAC, the trade is up +25%. And FXI bearish play is also about to give some dividends in the market fall today. With the fall […]

  7. OptionPundit Avatar

    Closed the trade. No emotions, it resulted in pretty good profits and I don’t want to give that back to Mr Market.

    Sold Sept/Nov 50 put calendar for $1.05/trade.

    Net – Cost : $1.00/trade, Sold : $1.05+$.15=$1.20
    Profit : $0.20/$1.00 = 20% (excluding commissions).

    My commission are very low and hence I generally don’t count that.

  8. […] update those who have been following BAC income trade, I closed it today as I don’t want to give “kool” profits back to Mr Market. For […]

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