5-th Option Combination

[Options-trader 10]

I propose you to observe the process of my next option combination conducting.

Size of investment for one combination is 50,000$. For purchase straddle i put no more than 2/3 total amount of investment. The remained sum is necessary for management of a combination. Today i opened long straddle of CAT (Caterpillar Inc.). It has been bought 35 contracts of NOVEMBER'12 90 CALL (4.57$) and 35 contracts of NOVEMBER'12 90 PUT (4.88$). In purchase it has been spent: 9.45*100*35=$33,075. Further i will conduct the combination.

[Options-trader 10]

Now share is trading near $85. It is necessary to conduct the combination. So i have bought 35 contracts of NOVEMBER'12 85 CALL (4.40$). In purchase it has been spent: 4.40*100*35=$15.400. Total investments to the combination is $48.475.

[Options-trader 10]

At opening the share is trading near $90. Premiums of the positions of the combination are: NOVEMBER'12 90 CALL - $3.90, NOVEMBER'12 90 PUT - 4.60$, NOVEMBER'12 85 CALL - $6.70. I sold all contracts of NOVEMBER'12 90 CALL. Expences to combination was reduced to $9.95. Current profit of combination is $1.60 or 11.5%.

[Options-trader 10]

The share is near $94. It is time to close the combination. I do it at bid price: NOVEMBER'12 85 CALL - $9.90, NOVEMBER'12 90 PUT - $2.72. Total profit is: (($9,90+$2,72)-$9,95)*35*100=$9,345 or 18.7%.