Sell ICE Puts, Hold Calls

The Only Chance for a Profit

By Bryan Bottarelli
Tuesday, August 10, 2010 12:58 PM EDT
Tue, 10 Aug 2010 16:58:00 GMT

PLAY: Sell your ICE August 105 Puts (O:ICE 10T105.00) at market, good for the day. Hold your ICE August 110 Calls (O:ICE 10H110.00).

Dear Bottarelli Research Member,

If you played the earnings strangle on Intercontinental Exchange (ICE – NYSE), then you know that this play has not experienced that earnings move that could push a two-sided basket into the profit zone. Ever since reporting good (but not great) numbers, ICE has remained stuck in between the $110 and $105 strikes, which puts us in a frustrating position. Notably, do we sell the call or sell the puts?

ICE

At this point, ICE is moving down to support at $105, which has pushed our ICE August 105 Puts (O:ICE 10T105.00) back up to $2.05. Given this support point, and Bernanke’s possible market stimulative comments this afternoon, I think we should sell the puts now, and then hope that ICE can blast back up to $110 (or above). If so, we might be able to finagle our way out of this position with minimal damage. At this point, this represents the only way to pull this one out of the mud. Here’s the maneuver…

PLAY: Sell your ICE August 105 Puts (O:ICE 10T105.00) at market, good for the day. Hold your ICE August 110 Calls (O:ICE 10H110.00).

And as always…

Lock and load!

Sincerely,

Bryan Bottarelli
Editor, Bottarelli Research
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