FXCM Inc - FXCM - Daily - Options Strategy with plenty of upside

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I doubt this trade opportunity will last long on Monday morning as traders step in and put this trade on.

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.
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Arbitrage. I like it

Those August Calls are very cheap
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I added some info that was intuitive to me, but I didn't label - The green line is the $2.50 strike. The Red numbers above the green line are calls and the red numbers below the line are the prices of puts.
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So have you seen near terms vs long term options trade like this when you see a stock price flush?
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QuantitativeExhaustion QuantitativeExhaustion
Rare event and for a stock to have liquid options to take advantage of.
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timwest PRO QuantitativeExhaustion
We can see on Monday morning. The stock has been trading 50 times normal volume, so their is a chance for liquidity in the options.
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beller timwest
Thanks for sharing this notice, i'm using FXCM, it's a good brooker for me, they have reduced the leverage of my forex account (and requested more margins, they pass from 0.5% to 2%, but notice you that before i was enable to select from my account 0.5%,1%,2% as margins, so ,i think, all is inside the "possible normal" controlled brooker actions to protect itself and finally the clients). they did this from this past hot weekend (bce+greek), the broker is technically good, i think it can return back to close the gap in the next months with a good news.. also for me already LONGGG! (anyway, fingers crossed!)
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I'm using them as well...
charttrader PRO charttrader
What is your expectations about their stock price?
beller charttrader
i'm in for a long hold.. closing the down gap with some good news or almonst area 8-12$, but the rise, i think, is slow and there is possibility of another big bear movements before this..
Tim, great chart!
Can you clarify this?
You're selling and buying calls so you risk just the cost of the operation?
Selling Calls / Near Dated = Stock Price Goes Down you net the difference

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.
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IvanLabrie PRO QuantitativeExhaustion
Great, thanks for the clarification JR.
actually with volatility those Calls would be worth .20 to .25 with FXCM going to 1.0 next few weeks / so this is a very good trade
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IvanLabrie PRO QuantitativeExhaustion
Good stuff!
Nice trading idea. How do you find these cheap options? How can I find this kind of cheap options?
Thank you very much :)
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timwest PRO BornToBeTrader
I just happened to be watching this stock and pulled up the options. I don't have a "screener".
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wouldnt it be better in this strategy to buy puts instead of selling calls?
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timwest PRO 5thdisciple
? I am buying a call spread, and buying a put spread.
What if you have only one option - buy or sell - what would you prefer? I bought it @1.90 and thinking what to do now. Is there any potential for grow?
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FXCM Inc (NYSE: FXCM) on Friday detailed some company metrics to assuage the market, while also expressing an intention to sell its non-core assets. However, Citi on Monday reiterated its $0.75 per share price target and Sell rating. That price target represents a 68 percent decline from Friday’s close.

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.
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