Stock updates

LLTC took a big drop today wiping out all my gains.  That's a direct result of greed when I refused to take a 100% gain and was looking towards a 300% profit potential  (I need to remind myself of the old saying "a bird in hand is better than 2 in the bush" more often).

So I decided to play a long strangle just now.  Best Buy chart is looking decent with a potential flag pattern.  If the earnings on Tuesday (9/14) surprise, we could see a nice move.  However, to hedge my bets, I purchased  Sep 35 calls for 0.55 and Sep 33 puts for 0.71.   A big move in either direction could net me some cash (hopefully more than the 1.26 I laid out.  Options expire on 9/18 so this is a very short term play on expected volatility. 

A Long Strangle is when you open a long position in both a Call option and a Put option with different strike prices but the same expiration dates.  This is similar to a Straddle but the Call option typically has a higher strike than the Put Option.
The maximum risk is limited to the total premium paid for both the Call and Put option premiums.
Maximum profit is unlimited on the call side.  The maximum profit on the put side is from breakeven to $0.
The break even point is the total debit of both the long Put and long Call premiums, or the Call strike plus the total debit and the Put strike minus the total debit.

So this would pay off if a fairly large move happens as a result of the earnings announcement for Best Buy.  If the stock moves up or down rapidly, profits can be made.  The worst scenario is that the price does not move in response to the earnings announcement making both the call and the put almost worthless.

I also opened a new position in RIG by purchasing Oct 60 calls for 3.30.  The stock has moved strongly last couple of days and shows good momentum.  Would love to get a double in a week or so and get out.

Happy trading and good luck.