New Trade – bull put spread

Stock / Symbol: [private_monthly]JDS Uniphase / JDSU [/private_monthly]
Price at trade post: $19.40
Option Strategy: bull put spread

Reasoning: The telecom equipment group is under significant pressure this morning, with [private_monthly]JDSU[/private_monthly] taking it on the chin. Rumors are swirling that AT&T is cutting back on cap-ex spending, and we believe the street is over-reacting. In early February, [private_monthly]JDSU[/private_monthly] reported a blow-out number with strong guidance and the stock moved from the mid $17’s to a high of $29.12. We’ve seen a major retreat in the name and feel that this is a great entry point. We also like that with this trade structure (bull put spread), our break even is at 16.60, which is 14% lower that its current price.

Max Risk: $632
Max Reward: $168 or 26% by May expiration
Profit Range: $16.60 +
Max Profit at: $17 or higher

Trade Details:
[private_monthly]

BTO 4 JDSU May11 15 Puts
STO -4 JDSU May11 17 Puts
for a net credit of $0.42 per contract

Requirements:
Cost/Proceeds: ($168.00)
Option Requirement: $800.00
Total Requirements: $632.00
Estimated Commission $12.95

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Chart:
[private_monthly]

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