Double Boeing Diagonal

Boeing (BA) recently broke-out (bullish set-up) and I am looking for an income trade that can benefit from new base as well as benefit from the upward movement.

Here is an example of a double diagonal trade:

ba-dd-risk-profile.png  ba-dd-transaction-jul-07.png 

This trade is:

  • Sell : Jul 95 Puts and 105 Calls 
  • Buy : Aug 90 Puts and 110 calls
  • Credit : $0.65
  • Margin Required : $4.35 per spread
  • Return expected by Jul expiration – Roughly $80. ROM – $80/$435= +18%
  • Break Even points – $93.5 and $106.7

Though this is a theta and vega play, this trade can easily absorb upto 7% drop in volatility. This is quite delta netural with a mild bullish bias, and hence will slightly benefit from the upward movement. $95 should provide strong support and hence the range is wider on the higher side vs the lower one. 

Profitable trading, OptionPundit

Disclosure: This is not part of the OP Newsletter for July income trade. But I will track it to closure here.


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5 responses to “Double Boeing Diagonal”

  1. OptionPundit Avatar

    As of June 1 closing, this has resulted in $22 profit on $435 investment/per spread.

    That is 5% profit.

  2. […] BTW, the other trade double diagonal on BA that I mentioned here for free, is also making money (+4.6%) despite a rapid fall in BA. […]

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  4. […] Separately I had also shared a BA double diagonal for free to OP readers. This trade is already making 8% gains. […]

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