Steve Sosnick of Interactive Brokers suggested on Bloomberg Markets an options strategy in Valeant Pharmaceuticals Intl Inc VRX.
The company is going to report earnings next week and Sosnick wants to use elevated implied volatility to sell options. He wants to sell the May 11, 17.50 strike call and buy the May 11, 19 strike call for a total credit of 60 cents.
If the stock drops below $17.50, Sosnick can maximally make 60 cents. The breakeven for the trade is at $18.10 and if the stock moves above that price, Sosnick is going to lose money. His maximal loss is 90 cents.
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