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Author: IlanBigfoot Three stars, 500 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 211  
Subject: Re: WESTERN UNION OPTION STRANGLE Date: 1/29/2013 3:29 AM
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I'm glad to give my 2¢.

A long strangle profits from fast motion in either direction. For example, the August trade would only be profitable if the stock fell below $11.16 or rose above $15.84 (plus fees) before August 16th. You also miss out on the dividend.

Are you neutral on WU, or bullish? I personally don't see much chance of profiting to the downside with WU falling below $11.16. At that point classic value measures like yield (~4.5%) and P/E (~5.5!) would be very attractive.

I have bought the "straight" stock for the dividend and profit to the upside. You may consider forgoing the dividend and buying just the August call, making the trade profitable above $15.05 (plus fees). I believe it likely WU will go up 7.1% in 7 months.
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