Great OXPS Plays

We profit from common stock and options trading.

By Wall Street Media on MSN Money Dec 14, 2010 4:10PM

Written by Douglas Estadt

 

Today, we take a closer look at a unique and profitable scenario involving optionsXpress Holdings, Inc. (Nasdaq:OXPS), a web-based brokerage company.  Investors may stand to profit from the simultaneous trading of OXPS common stock and options.  Common stock shareholders will be paid a substantial dividend provided that they own the stock before December 27th.  This dividend will then likely spark a sell off that will, in turn, benefit options traders as the put value increases.  The plays from which we’ll profit are as follows:

  • Purchasing the common stock, which is currently around 19.50, will pay a one-time dividend of 4.50 come the end of December
  • January 20 put is trading at 1.20; as the stock will likely sell off following the 4.50 pay out, the put will become increasingly valuable and so we will be buying 3x as many of these as we bought common shares.

For more on OXPS, view today's show:

 

 

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