1/19/2013:WU is currently trading around $13.40 a share so I was thinking the $13 puts and the $14 calls for these two months. May was .58c/.71p at last trade, and August is .79c/1.05p at last trade.WU has had a nice spike up the past few days, and is now at $15.64. I thought it would be worth a quick review.The May strangle with strikes of $14 call/$13 put and initial price of .58c/.71p is now at $1.65c/$0p. Initial outlay of $1.29 is now worth $1.65, or up 27.9% (not including fees, taxes, and Maalox)August strangle, same strikes bought for .79c/1.05p, is now at $1.85c/.15p. Initial outlay of $1.84 now worth $2.00, or up 8.6% (niftM)Compare these to the underlying stock itself:Jan 22, 2013 Open 13.46Mar 13, 2013 0.125 DividendMay 3, 2013 Close 15.64(15.64+.125)/13.46 - 1 = 17.1% returnand the market (aka the EFT SPY) has returned 161.37/148.47 = 8.7%Straight May calls was the one to do: $1.65/.58 = 184% profit, but then hindsight's 20/20, ain't it?
Jan 22, 2013 Open 13.46Mar 13, 2013 0.125 DividendMay 3, 2013 Close 15.64
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