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Zaheer, Dennis, Robin and others who helped:
Thank you for your help with my question.
The answer as I see it now is:
(the size of the contract) * (option price) = cost
(for CR, $500)*(for CR192 Call, 2.85) = $1425
As to why I chose to do a straddle. Zaheer, you guessed it.
>If you believe that the price of the future is going to explode in one
>direction or another but you don't know which, AND that volatility will
>rally with it, then this is a good trade.
I see the CR in a triangular contraction, storing up the energy for a burst,
(I suspect upwards, but I wouldn't be shocked with a downward thrust,
either). Right now the price is in the center of the triangle, therefore
both the call and put are probably at a fair value (although this part of my
logic could be questioned).
>You also don't mention why you would want to put this trade on and for what
>time frame.
I see a time frame of about 10 (trading) days. Which should leave
sufficient time value in the options I chose (expiry June 11).
>The price of the put implies a belief that a one standard deviation move
>for all price returns over the next 10 months will not be more than 2.35
>ticks.
This intrigues me, would someone like to give more detail on it?
Thanks again,
Joe
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