This is a very interesting way to get exposure to FXCM from May to August as it moves away from the $2.50 price area. The August options are relatively cheap compared to the May options which seem relatively expensive. If you buy the cheap options and sell the expensive options, you are left with a very low cost trade from the May expiration through the August expiration that has a ton of upside potential, from my perspective.
Options are not for everyone, and they can be complex or very simple, depending on what you do with them. You can be an insurance company by selling options and you can be a gambler and buy way-out-of-the-money options, hoping for a big home run. There are a million strategies in the middle of that spectrum. I encourage anyone with a little bit of interest to study them and use them to control and manage risk in their portfolio.
Cheers and good fortune,
Tim 5:26PM Saturday, January 25, 2015
AGAIN: I am both LONG and SHORT on FXCM here - I'd like to see it go up or down significantly from current prices, between May and August.
Citi specifically noted that it expects FXCM’s share price to first bounce, before noting that all positive benefits are destined for Leucadia. Specifically, Citi argues that any sale of non-core assets will go first to Leucadia as part of its emergency bailout on January 16.
Citi failed to address rumors in the market of an ultimate buyout, specifically, last week it was rumored that Charles Schwab Corp would offer .25 per share for the troubled broker.
In this case if FXCM goes to 1.00 you earn 1.50 + Time and a little on Volatility (not as much when your in the money)
Buying Calls Long Dated = If price goes down in near term, your options still have some value, but much less at 1.00/ probably close .10 to .15 . However, these options still hold time value. So if price goes down you might as hold onto Calls.