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The front page of the March 1 edition of The Wall Street Journal talked about an increase in antitrust complaints against Google (NASDAQ: GOOG). It points to the parallels of what happened to Microsoft (NASDAQ: MSFT) in the ’90s as they fought through antitrust complaints. An argument could be made that for the long term, these mounting complaints might result in reduced growth for Google, or at least result in a long-term range-bound stock.
For investors who believe GOOG could be bound for a consolidation period, here is a January 2011 short iron condor. Note that it will take a long time (1o months or so) to realize the return.
Short Iron Condor Trade Details:
GOOG is currently trading at $542.75, up roughly 1.9% today.
Below are the elements (one bull put spread, one bear call spread) for this iron condor. If possible, use a limit order to place this trade, specifying one price for the four-legged strategy.
Iron Condor Part I: Bull Put Spread –
Iron Condor Part II: Bear Call Spread –
Overall credit for the four-legged spread: $19.00
By opening a free virtual trading account with OptionsHouse, you can build a profit/loss diagram to help visualize the risk/reward dynamics of this trade.
Profit/Loss Details:
Maximum profit: $19.00 (the total premium collected) minus commissions.
Maximum risk: $11.00 (the difference between call or put strikes minus the premium collected). Return on risk is approximately 173% for this strategy.
Upper breakeven price: $589.00 (the strike of the sold call plus the total premium).
Lower breakeven price: $491.00 (the strike of the sold put minus the total premium).
More on GOOG:
Google still considering how to proceed in China
Trading out of a Google (NASDAQ: GOOG) bull put spread
Remember, trading Ideas are generated by the ONN Idea Generating Platform as a starting point for people to begin their own research. Trading ideas are not intended as trading or investment advice or recommendations that any particular security or strategy may be suitable for any specific person. You are solely responsible for your investment decisions, but we hope that some of these ideas will give you a starting point as you look for strategies to employ.
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