Stock / Symbol: [private_monthly]Verifone / PAY[/private_monthly]
Price at trade opening: $34.77
Option Strategy: diagonal call spread
Max Risk: $465
Max Reward: $147 (at Nov expiration)
Profit Range: $34.74 - 42.88 (at Nov expiration)
Max Profit at: $37
Reasoning:Expect that [private_monthly]Verifone - PAY[/private_monthly] will move up to at least $37 by November 19th. This diagonal call spread yields us an uncalled return of 8.82% and a called return as high as 31%. Break even on this trade is at $34.74. If this stock trades lower than $37 after November expiration, we'll look to sell another near term call for another 8 - 15% yield.
Trade Details:[private_monthly]
Buy 1 PAY Apr11 34 Call @ $5.10 = $510.00
Sell -1 PAY Nov10 37 Call @ $0.45 = ($45.00)
Requirements:
Cost/Proceeds $465.00 Net Debit
Option Requirement $0.00
Total Requirements $465.00
Estimated Commission $12.95
[/private_monthly]
Chart:[private_monthly]
Flash Player 9 or higher is required to view the chart Click here to download Flash Player now[/private_monthly]
Non-members, click here for access
Speak Your Mind