Friday, March 20, 2009

Why UCO Straddles Were Profitable

Below you will find a chart that shows why every single UCO (oil ultra ETF) straddle or strangle bought this options expiration month was profitable. It shows you the prices paid for calls or puts at well-defined regions of the chart, with prices that represent local peaks and valleys. Every point between a peak and a valley would haver had a better or an in-between ROI
Actual results were posted on this blog throughout the month.

The charts shows IWM on top of each column, the calls for strikes 6, 7.50, and 9 on the left column, and the corresponding puts on the right column.

(please click to enlarge)

The chart hows the percentage increase only for one side of the straddle/strangle. The other side would still have some residual value left. Returns were also quite significant on some points. The last week is always the one to avoid, as it is too risky, but still some positions were profitable then.

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