Options Example
Trade Recommendation: 23rd May 2006
Market: July 2006 Gold (GCN6)
Tick value: 1 dollar move = $100
Option Expiration: 06/27/06
Trade Description: Bull call butterfly Spread
Max Risk: $900
Max Profit: $4100
Risk Reward ratio 4:
Buy one July 2006 Gold 630 call, also buy one July Gold 730 call, while selling two July Gold 690 calls,
for a combined cost and risk of 9dollars ($900) or less to open a position.
Trade perspective:
At expiration Gold ends up anywhere in the zone of 645 – 715 position makes a profit.
The closer Gold ends up to 685.00 the more position the makes.
Sophisticated, but very simple!