Sweet 16 Option Trades

The Options Trader’s Guide to Technical Analysis

#1 NNI April 20 Calls

By Nick Atkeson, Big Money Options

Senate Democratic leaders are considering adding an overhaul of student lending to the health care reconciliation bill by revoking the ability of
private banks to sell government-backed student loans. Republicans are against making this move, and pretty much the rest of the health care bill.

For Nelnet Inc. (NNI), how this situation plays out is critical,
because making student loans is essentially all the company does.

If the student lending legislation is not attached to the bill, NNI is likely to appreciate strongly. The same is likely to happen if the legislation
is attached, but the health care bill fails. On the other hand, if it is included and the bill passes, NNI is likely to depreciate strongly.

With so much uncertainty surrounding this legislation, the ideal trade would be a straddle –
buying calls and puts on NNI so you profit no matter what the outcome. But if I had to pick just one side of the trade, it would be the NNI
April 20 Calls (NNI   100417C00020000).

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