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January 3, 2013  Thu 9:05 AM CT

AIG: SEE CHART GET CHAIN FIND STRATEGIES
A short-term put spread tops the action in American International Group even as it trades near two-month highs.

A trader bought 2,550 January 36 puts for $0.38 and sold 5,100 January 35 puts for $0.14, according to optionMONSTER systems. This spread is in the new Weekly options for next week, so there was no open interest in either strike.

This put vertical cost $0.10 to open, which is the maximum at risk if AIG remains above $37. The maximum gain on this ratio spread would come if the stock is right at $36, while below that the trader is effectively long stock. (See our Education section)

AIG is up fractionally this morning at $36.53. Yesterday's close was the insurance giant's highest since Oct. 18, as shares have run up from support at $31 over the last six weeks.
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Options Academy: Ron's Risk Calculation--A Real Life Example

It is rare that I get a chance to give a real-life, real-time example in my articles that the readers were not only following but were actually involved in at the time the event is happening. Well, that is where we are right now in our QQQ trade from last week. Let's recap the trade itself.

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