Iron Condor - AAPL

Initiated a new iron condor position for AAPL (93.10).

SOLD -1 IRON CONDOR AAPL 100 19 AUG 16 110/115/90/85 CALL/PUT @1.96

Max Gain - 196
Max Loss - 304

Adopted a slightly bullish stance for this position.

Iron Condor - BABA

Alibaba (BABA) released its quarterly result on 5 May 2016 before market open.

Alibaba reported revenue of $3.75 billion for its fiscal Q4 ended March 31, beating the Wall Street consensus of $3.58 billion. Sales rose 39% in local currency year over year, the company’s highest growth rate in the past four quarters.

Earnings per share minus items rose 88% to 33 cents, but that was far below the consensus of 55 cents. Costs associated with new businesses initiatives and rising logistics and order-fulfillment costs weighed on the company.

Alibaba reported gross merchandise volume (GMV) of $115 billion, slightly edging the consensus of $112 billion and up 24% year over year. Transactions through mobile devices accounted for 73% of GMV volume.

The company reported annual active buyers of 423 million, up 16 million from the prior quarter and up 21% year over year. Monthly mobile active users reached 410 million, an increase of 17 million from the prior quarter and up 42% year over year.


Initiated a new iron condor position for BABA (79.10)

SOLD -1 IRON CONDOR BABA 100 20 JAN 17 95/100/65/60 CALL/PUT @1.76

Max Gain = 176 (As long as the BABA stock price stays between 65 and 95 at maturity on 20/01/17)
Max Loss = 324

Adopted a neutral stance for this position.

Naked Put Options Writing

The Coca-Cola Company (KO) 40.22 (15 November 2013)

Put Options Expire at close Friday, January 15, 2016 Strike Symbol Last Chg Bid Ask Vol Open Int 20.00 KO160115P00020000 0.32 0.00 0.28 0.31 50 92 23.00 KO160115P00023000 0.49 0.00 0.46 0.50 40 162 25.00 KO160115P00025000 0.65 0.05 0.64 0.69 1 268 28.00 KO160115P00028000 1.12 0.00 1.05 1.11 5 511 30.00 KO160115P00030000 1.45 0.00 1.44 1.50 2 609 33.00 KO160115P00033000 2.25 0.00 2.23 2.32 3 715 35.00 KO160115P00035000 3.00 0.05 2.92 3.05 15 1,402 37.00 KO160115P00037000 3.87 0.07 3.80 3.90 20 1,403 40.00 KO160115P00040000 5.40 0.00 5.30 5.45 3 220 42.00 KO160115P00042000 7.33 0.00 6.50 6.70 1 69 45.00 KO160115P00045000 8.85 0.00 8.60 8.75 2 299 47.00 KO160115P00047000 12.30 0.00 10.10 10.30 38 38 50.00 KO160115P00050000 14.80 0.00 12.60 12.80 51 51 55.00 KO160115P00055000 17.10 0.00 17.05 17.25 80 1,086

Sell one contract of Jan 2016 30 Put for a premium of 1.45 (x 100) = 145

Return on Investment (ROI) for one contract = 145 / 300 (broker requires capital tie-in of 10% of strike price) =  48.33% from now until 15 January 2016 if KO stays above 30.00 at expiration.

If KO falls below 30 at expiration, put options seller is obligated to buy KO at cheaper price of 30 per share instead of 40.22 per share at the moment. This is in addition to 1.45 premium received. So the nett purchase price for KO would be 28.55 per share. A whopping 29% discount from current market price!

Or the put options seller can buy back and close its naked put position prior to expiration from having to take delivery of KO shares at 30 each if the seller predicts KO will drop below 30 at expiration.