Stock / Symbol: [private_monthly]Ford Motor Co. / F [/private_monthly]
Price at trade post: $16.10
Reasoning: With the recent pullback in this stock surrounding the GM, we see a buying opportunity in a sector with solid growth. Technically, the stock looks to have found support at this level. We are presenting 2 trade options here. One requires just $396 to put on and the other significantly reduces the break even price but requires $1,559 in capital.
Trade option A:
Option Strategy: call spread
Max Risk: $396
Max Reward: $504 or 127% by Feb 2011 expiration
Profit Range: $16.32+
Max Reward Price: $17.95 at Feb 2011 expiration
Trade Details:[private_monthly]
Buy 3 F Feb11 15 Call $1.88 $564.00
Sell -3 F Feb11 18 Call $0.56 ($168.00)
for a net debit of 1.32 per contract
Requirements
Cost/Proceeds $396.00
Option Requirement $0.00
Total Requirements $396.00
Estimated Commission $12.95
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Trade option B:
Option Strategy: risk reversal call spread
Max Risk: $1559
Max Reward: $241 or 15.46% by Feb 2011 expiration
Profit Range: $15.59
Max Reward Price: $18 at Feb 2011 expiration
Trade Details:[private_monthly]
Buy 1 F Feb11 15 Call $1.89 $189.00
Sell -1 F Feb11 18 Call $0.56 ($56.00)
Sell -1 F Feb11 15 Put $0.74 ($74.00)
for a net debit of $0.59 per contract
Requirements
Cost/Proceeds $59.00
Option Requirement $1,500.00
Total Requirements $1,559.00
Estimated Commission $38.85
[private_monthly]
Chart:
[private_monthly]
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