Stock / Symbol: Wal-Mart / WMT
Option Strategy: calendar call spread
Trade entry date: Apr 6
Price at trade entry: $53.03
Price at this post: $55.54
Reasoning: With WMT closing in on $55, our optimal price for this trade by Friday expiration, we're entering in an order to close the position for a net credit of $1.60 per contract. As we paid $0.78 for the spread, we'll have made a 105% return if we get filled. If you want to gamble a bit, you could hang on till the last few trading hours on Friday to see if you can close the trade at around $1.90 per contract with WMT right at $55 per share. But for us, we're happy with making nearly $500 on the trade after risking just $468.
As usual, this is a GTC limit order.
Trade Details:
STC 6 WMT Sep11 55 Calls
BTC -6 WMT May11 55 Calls
for a net credit of $1.60 per contract
Max Risk: $468
Max Reward: $698 or 147% by May 2011 expiration
Profit Range: $52.10 - $58.60
Max Profit at: $55
Uncalled Return: 26%
Reward upon fill at $1.60 / contract: $492 or 105%
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