Dan Nathan spoke on CNBC's Options Action about an options strategy in SPDR S&P 500 ETF Trust SPY that could make money if the stock makes a sharp move up or down.
He explained that options prices are cheap now and that the straddle options strategy could be set up relatively cheap. When the stock was trading at $217, the price of the October 217 put was $2.25 and that was also the price of the October 217 call, which makes the price of the straddle $4.50 or only 2 percent of the underlying price.
The strategy would make money if the stock jumps above $221.50 or if it falls below $212.50 at the October expiration.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.