Playing the Expiry: February 18, 2012
Shares of Yahoo! [YHOO:NSD] slipped more than seven per cent at one point today giving way to a massive rise in the $15 puts for February (monthly contracts). The options were asking merely $0.02 on Monday, but were trading as high as $0.36 earlier today. As of right now, if you wrote the puts, you could get a fill of $0.20 or more. That protects you in the evenet the shares fall an additional 1.32 per cent. Total margin required is only $450 per contract. This provides a return of 4.44 per cent against margin used. This trade is a bullish to neutral speculation suggesting the trader believes the shares will not trade below $15 on Friday.
A person could also write the 15 calls and earn an over $0.30 creating a minimum trading range by Friday of $14.50 to $15.50.
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