January 24, 2015 10:33 AM | 1 min read
27% profits every 20 days?
This is what Nic Chahine averages with his options buys. Not selling covered calls or spreads... BUYING options. Most traders don't even have a winning percentage of 27% buying options. He has an 83% win rate. Here's how he does it.
Dan Nathan suggested on the show on Friday that viewers should consider a bearish options strategy in
Alibaba Group Holding Ltd (NYSE: BABA). The company is going to report earnings on January 29 and Nathan thinks that it is going to be a big quarter for it. In the last earnings report there were some margin pressures, but the sales were huge. Investors generally want more data and
Alibaba Group Holding Ltd doesn't give guidance, which could be a problem. Nathan doesn't want to focus so much on earnings report, instead he wants to focus on 429 million shares that are going to become available for trading on March 18. There will also be one IPO lock-up in September, when 1.6 billion shares will become available.Nathan wants to exploit an increase in implied volatility ahead of earnings and sell the February 95 put for $1. He also wants to buy the March 95 put for $2 to trade on a pressure from the IPO lock-up. The trade would cost him $1 and if
Alibaba Group Holding Ltd trades below $94 or 9 percent lower at March expiration it is going to be profitable.
27% profits every 20 days?
This is what Nic Chahine averages with his options buys. Not selling covered calls or spreads... BUYING options. Most traders don't even have a winning percentage of 27% buying options. He has an 83% win rate. Here's how he does it.
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