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December 15, 2009 7:41 EST Related Symbols: YHOO
you're watching:
Mad About Options
An options-related take on Jim Cramer's latest recommendations and analysis on the latest securities and ETFs getting attention on the Street.
ONN.tv looks at how options players won or lost trading Yahoo! (YHOO)
Mad About Options takes a look at the stocks getting coverage from Jim Cramer, Fast Money casts and other heavy hitters in the financial press and reviews strategies option traders might have used if they agree or disagree with these assessments of the underlying stocks.
The Pick – Yahoo! Inc. (YHOO)
The September 21st issues of Barron’s highlighted YHOO shares as a possible value play. That article was bullish, but YHOO shares are now trading at $15.70, down from $17 at the time of that article. How did investors who agreed with this bullish take end up doing?
Bullish Option Traders on YHOO:
The stock has dropped 8% since this time versus the broader market’s 4% rise. We pointed out on September 23rd that bullish investors sold the January 19/12.50 put spread for $2.30 and sold the January 19/22.50 call spread for 50 cents in this iron butterfly strategy. Investors collected $2.80, and this spread is now marked at $3.30. That’s a loser of 50 cents, compared to a drop of $1.30 in YHOO shares.
Bearish Option Traders on YHOO:
Those investors who disagreed with Barron’s were buying two November 20 puts for $3.30 and selling two November 17 puts for $1.20, paying $4.20 for this bear put spread. This spread expired with the stock trading at $15.38 and was a winner of $1.80, versus a $1.30 decline in the stock.
