Choosing the Right Expiration

Hi Shoppers,

I think Coca-Cola is ready for a change in trend. Check it out:

KO has been in a downtrend since its high on Aug. 17 of $57.56.

It closed on Friday at $55.65.

I think Friday’s candle is a doji, which can indicate a bounce or change in trend in KO back to $57.50.

Looking at the options, I like the shorter term expirations. I need to compare the Sept.10 expiry to the Sept. 17 expiry:

The 55.50-strike calls are just $.15 in the money.

The Sept. 10’s are offered at $.61 with an implied volatility of 12.08 and the Sept. 17’s are offered at $.69 and trading with an implied vol of 11.57.

Which is the better value?

The Sept. 17 calls offered at $.69 with the lower implied volatility is the better purchase. You are paying an extra $.06-$.08 for another seven days — totally worth it.

If KO opens higher and trades higher today, I will pay up to $.70 for these calls.

I know this is a simple exercise, but it’s one that will help you make more money.

Thanks for Reading … See You Next Tuesday!

Licia Leslie

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