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2 Responses
Hi. For options on ERIE, the liquidity and bid/ask spread do not seem to be ideal. Thoughts?
Hi Richard:
I agree. I plan on discussing this in the session today. But the way I’d look to play it would be more like a binary: Example would be Targeting $470 so going out to Jan and Buying the Jan $460 Call: Selling the Jan $470 call and putting a limit order in for about $1.50 with a target of $8 if we get filled. It’s trading wide now but we can dictate our price and if we don’t get filled by next week then we’ll move on to find another trade.
Another way to play it for those with larger accounts that I really like is doing a Jade Lizard:
Sell the Jan 420 Put
Sell the Jan 470 by 480 Bear call spread:
Collect $15 or more:
This trade technically makes money with price anywhere above $415 by Jan 17th. The $420 level should play as a nice level
of support with the 200 and 20 period sitting right near that level.
So its a nice way to get paid about 3.6% over the next 2 months or we own it at the level we want to anyways. And if we
do get put the stock we can then start selling front month calls to generate income until we’re called away at a level we like.
Hope this helps.