Stan’s Option Challenge: Question #8

We all know that trading options is exciting, highly competitive, and can be very profitable. The key to long term and consistent profits in option trading is options education. The McMillan Mentoring Program, which is run by former Market Maker, white badge AMEX Floor Official, professional trader, and longtime MENSA member Stan Freifeld, can take your trading to the next level. To see where you stand, take Stan’s Options Challenge by answering his question on the first Monday of each month.  

Stan’s Options Challenge: Question #8

With XYZ stock at $61, you are considering the purchase of the Oct/Dec 60 Calendar spread. There are 25 days to Oct expiration and 88 days to Dec expiration. It will cost $2.30 with Calls, or $2.00 with Puts. The risk free interest rate is 5% and the stock goes ex-dividend for .40 in 20 and 110 days. To obtain the highest profit potential, you should:

A) use Calls
B) use Puts
C) use either, depending on volatility prediction
D) use either, depending on price prediction 

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*Answers must be received by 12:00 eastern time on 7/14/14. Participants may only submit 1 answer. The complimentary access to the download will begin after the conclusion of the 1 week period. Winners will receive an email containing a unique coupon code for the product.