Below is the LNKD trade I will be discussing on Options Action tonight. Below that trade is a bonus trade in GRPN.
Here’s the trade:
-Sell 1 Feb 45 Put at 1.50
I chose the $45 strike as my short strike because that is the IPO price and would expect some support there, but I do believe the next real test might take it back to unchanged and any hiccups on their next quarterly call, (that should come by Feb expiration) could be the exact catalyst.
I have absolutely no smoking gun here and this put spread is a good bit out of the money so this is not a particularly high conviction idea, but I like to spread my chips around a bit and be a bit contrarian. This trade is not for everyone and I am risking what I would be fine losing as I like the exposure to a meltdown in speculative names.
And here’s the bonus trade:
GRPN ($22.43) Bought July 10 /5 1×2 Put Spread for .70
Bought 1 July 10 Put for 1.44
Sold 2 July 5 Puts at .37 each
Break-Even on July Expiration:
Profits btwn 9.30 and .70 make up to 4.30 with max gain at 5.00 of 4.30
Losses of up to .70 btwn 10 and 9.30 and then again btwn Zero and .70, with max loss of .70 above 10.00
This is a really speculative trade and not a bad one to stay on the sidelines and observe how it plays out. This trade is not for everyone.