Tuesday, April 11, 2006

Exit strategy for AMAT and TXU, FTO

AMAT: if the Put position is closed the minimum we should recieve is 0.65 cents, maximum we should (accord. to current market price of the option) recieve is 0.70 cents. we will hold on to the Call option....untill it gets some value (if it does we will sell it as soon as there are buyers for it at 0.05 cents).
So Final result:
Total investment: 0.45 cents
Total assured minimum return: 0.65 cents
% return : 44% profit minimum (the call option could still add to the value, in which case, we get: 55%)

TXU: Total investment: $2.95
Value of current position (if we liquidate): $2.90
as soon as TXU falls a little further, we will be in profit, then decision can be made as to if we should liquidate.
- considering there are less than 10 days for option expiration, we need to close this position to caputure as much "theta" as possible.

FTO position is for May expiration, so as of now we will not do anything about it.

No comments: