Stock / Symbol: Kellog / K
Price at trade post: $50.51
Option Strategy: [private_monthly]diagonal call spread[/private_monthly]
Reasoning:[private_monthly] Over the past 2 years, K has traded between a low of 47.28 and a high of $57.7, just the type of stock we like to trade. This particular trade is counting on a slight pullback to $50 by January expiration. If K is well under $50 by Jan 20, we'll look to sell some more near term calls. In the interim, If the stock trades over $51.50, we'll close out the trade for a slight profit. [/private_monthly]
Trade Details : [private_monthly]
BTO 3 K Jun12 47.5 Calls
STO -3 K Jan12 50 Calls
for a net debit of $3.10 per contract (GTC, limit order)
[/private_monthly]
Requirements
Cost/Proceeds: $930
Option Requirement: $0
Total Requirements: $930
Estimated Commission: $12.95
Max Risk: $930
Profit Range: $49.25 – 51.70 (Jan 20)
Max Profit: $125 or 13% @ $50 by Jan 20
Suggested Upside Stop: @ $51.50
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