Originally Posted by
Faulkner_SA
"Faulkner you're an option trader. What are your thoughts?"
Regarding the credit spread?
Taking the reverse and buying a call spread would be better. No margin requirements, lower max loss, higher max gain. Yeah it's not a credit spread and is a debit spread but 100 contracts is like what, $1,400 debit on the call side? Not talking big money here.
Really depends on range of value expected and perceptions of risk. Given my expectation of value for SIRI in a year I wouldn't buy puts under $4.50... so I don't even think a spread is necessary. Much under $4 in Jan 2016 should be undervalued and taking possession of shares there would be minimal risk.
Then again I look at this as an investment with a range of value and not a trade. I know I say that all the time... but it's a different approach.
Pure trade the credit spread isn't bad but SIRI isn't all that attractive, in my opinion, for option "trades". Share price is low enough just play around in range on the shares.
Optimal positioning right now looks to be long $3 calls or going with a $3 / $4 spread.
Are you interested in investing in SIRI or something?