Trade Alert – (BA) May 3, 2012

As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price.

Trade Alert – (BA)

Sell Short the Boeing (BA) May, 2012 $72.5 Puts at $0.24 or best

Opening Trade


expiration date: 5-17-2012

Portfolio weighting: 10%

($10,000/100/$0.24) = 28 Contracts

I am going to do the same as I did with the (IWM) puts and protect the position from time decay and falling market volatility buy selling short out of the money premium against my existing August $70 put position. These expire in two weeks. Don’t confuse them with the weeklies, George. This should take in (100 X .24 X 28) 67 basis points in additional return, or $672 for the notional $100,000 portfolio. Please note that I am doing this as a ratio on a 2:1 basis. I am selling short two near month $72.50 puts for every long dated August $70 put. If I keep doing this, I should be able to reduce my total cost to near zero. After the market makes its move on the April nonfarm payroll tomorrow, market volatility may fall further.