This Option Trade Could Profit $1,100 As BA Stock Flirts With New Buy Point | IBD | Summary and Q&A

907 views
โ€ข
April 5, 2023
by
Investor's Business Daily
YouTube video player
This Option Trade Could Profit $1,100 As BA Stock Flirts With New Buy Point | IBD

TL;DR

Learn about the put ratio spread options strategy and how to implement it on Boeing stock.

Install to Summarize YouTube Videos and Get Transcripts

Key Insights

  • ๐ŸŽญ Boeing stock has been performing strongly, with recent upward momentum.
  • ๐Ÿฅณ The put ratio spread options strategy can be implemented on Boeing for potential profits.
  • ๐Ÿ“‰ The strategy carries risks, particularly from sharp downward movements.
  • ๐Ÿงก The maximum gain for this strategy occurs at a specific stock price range.
  • ๐Ÿ”ฐ Beginner traders should practice and gain experience before attempting complex options strategies.
  • โœ‹ Options trading carries a potential for high losses, and caution should be exercised.
  • ๐Ÿ‘ฅ Boeing's industry group ranks highly among other groups, indicating relative strength.

Transcript

foreign ERS for today's trade we're looking at an option strategy known as a put ratio spread in Dow Jones component in Aerospace stock Boeing so taking a look at the stock on Market Smith Boeing has had a powerful run higher notching six up days in a row before pulling back on Tuesday Shares are now above both their 50-day and 200-day lines and cl... Read More

Questions & Answers

Q: What is the put ratio spread options strategy?

The put ratio spread involves buying a put option and selling two put options at different strike prices. It is generally used when the trader expects the underlying stock to be stable or slowly move lower.

Q: What are the potential benefits and risks of the put ratio spread strategy?

The strategy can provide a profit in up, down, and sideways markets and benefits from a fall in implied volatility. However, there is a risk of a sharp move lower early on and the trader could lose money if the stock moves significantly in a direction opposite to their prediction.

Q: How can one implement the put ratio spread on Boeing stock?

In this case, with Boeing trading around $209 a share, one could buy a 200 strike put and sell two 190 strike puts, all with the same expiration date. This would result in a net credit and the trader would make a profit if all the puts expire worthless.

Q: Is the put ratio spread options strategy recommended for beginners?

No, this strategy is not recommended for beginners as it involves naked options and carries a higher level of complexity. It is advised to practice in a virtual trading account before risking real money.

Summary & Key Takeaways

  • Boeing stock has been performing well, with multiple up days in a row and currently above key moving averages.

  • The put ratio spread options strategy is being discussed, which involves buying an out-of-the-money put option and selling two further out-of-the-money put options.

  • This strategy is considered neutral and can be profitable in various market conditions, but carries the risk of sharp downward movements.

Share This Summary ๐Ÿ“š

Summarize YouTube Videos and Get Video Transcripts with 1-Click

Download browser extensions on:

Explore More Summaries from Investor's Business Daily ๐Ÿ“š

Summarize YouTube Videos and Get Video Transcripts with 1-Click

Download browser extensions on: