XHB Vertical Trade

The Shadow Trader ProSwing report announced an entry into a short XHB position.  This turned out to be hard to borrow, but there are always options.

2012-01-20-XHB-Analyze

 

Shadow trader suggested the following prices

Price: $18.80
Stop: $19.75
Target: $17.50 (first target)

We’re going to use the ITM March 19 Put and the OTM March 17 Put to minimize Theta.  This puts our entry price at $69 per contract.  Max gain is $393 per contact on March expiration.  Stopping out 19.75 means we lose about $80 per contract.  Assuming the direction holds this has a decent risk/reward.  One strategy here is to exit when the target is reached, which would be worth at least $115 per contract depending on the Theta loss in the short put.

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