There’s a potential trade in WES.
If you share the following view:
i. WES likely to fall from around this level ($32.55) on 1 Aug 2012 time of writing
ii. Not likely to fall below $29.50 to Oct (quite a lot of support from $29 to $29.50 on the stock, see chart)
I. Options trade to take advantage of potential fall:
1 Buy Oct $3000 put and
2 sell Oct $2951 put
Costs and max loss is 10c per contract
If WES falls to about $30,
This spread is likely to generate a 100% return, making it about 20c gain per contract
Max gain possible tough is 40c. Capped, no matter how much WES falls
II. to buy WES
For those who wish to pick up WES at around $29.50 in Oct though, say 2000 underlying shares, spend $200 on this trade now for the potential to pick up shares later, plus potentially 40c profit at the time of buying
General information only. Personal advice cannot be provided in this forum. If one is needed feelp free to contact me.