Long Straddle – Free Trade Idea

OPPORTUNITY

There is an attractive long straddle trade in Cisco Systems (CSCO). Currently it is trading for $30.51.

CHARACTERISTICS

There is a 61.8% chance the stock will close above 31.30 or below 29.71 on 02-10-2017, and you will earn your target return of $3,851.10. There is a 73.5% chance the stock will close above 31.04 or below 29.96 on 02-10-2017, and you will earn a profit. Since this strategy has an uncapped reward potential, you can earn more than the target return should the stock move strongly either up or down. There is a 1.5% chance the stock will close between 30.47 and 30.53 on 02-10-2017, and you will have a total loss of $8,964.45.

Note that in actuality you cannot have a total loss unless the stock closes exactly at 30.50 on 02-10-2017, but we count the stock ending within 0.1% of 30.50 as a total loss.

ENTRY PLAN

To enter this position you will buy 165 call option(s) and 165 put option(s) with a 30.50 strike price. Both the calls and the puts will have an expiration date of 02-10-2017. This trade will require a net debit of $0.53, and the commission for this trade will be $219.45.

DISCLAIMER

All information presented here is current as of February 1, 2017 1:26 pm (EST). All trading involves risk. Free trades ideas are presented for illustrative purposes only and are not to be construed as financial advice.


How Did We Do? The Results…

This trade employed a Long Straddle strategy that needed CSCO to close above $31.30 or below $29.96 on February 10, 2017 to earn the targeted return. CSCO closed at $31.51 which resulted in a return of $3,851.10.