Can Qantas go any lower?

by Raymond Chan

Stock: Qantas QAN

Higher oil price, middle east unrest, then Libyan and there was Japan natural disaster too - all pressured Qan to early $2.00

Can it go any lower?

May be not. All negative sentiments are now be factored in the share price and it is due for a rebound.

View: bullish. Share price recovery.

Last price: $2.16

Options Strategy

Bull put spread

Intention: trade share price above $2.25 with minimal capital spend
Back up: buy shares at $2.16 with proctection

Strategy: Sell May $2.25 put and buy May $2.20 put for protection for net credit of 9c

Possible scenarios at May 26 expiry:

1 If QAN closes above $2.25, investor earns 9c
2 If QAN closes below $2.25, investor buys stock at $2.16

Maximum loss or capital spend per contract is 25c or $250
Maximum gain per contract is 9c or $90

Percentage return is 36% to 26 May expiry if all 9c is earned


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