New Trade : CSTR

New TradeStock Symbol: [private_monthly]CSTR[/private_monthly]

Option Strategy: bull put spread
Price at this post: $47.54

Reasoning: CSTR beat the street's earnings estimates but investors were obviously looking for better guidance. We think that this was a [private_monthly] negative overreaction to a pretty decent earnings report. We're going with a bull put spread here to take advantage of the negative sentiment surrounding the stock. The 42.5 strike puts we're selling have a delta of .23 and a 71% probability of expiring out of the money. If our downside stop is triggered, we'll either exit the position or roll to further OTM puts.

Trade Details:[private_monthly]

STO -3 CSTR Sep12 42.5 puts
BTO 3 CSTR Sep12 40 puts
for a min credit of $0.48 per contract (day order / limit order). Current mid is $0.52. Ok to enter trade tomorrow if not filled today.


Cost/Proceeds ($144)
Option Requirement $750
Total Requirements $606
Estimated Commission $12.95


Max Risk: $606
Max Reward: $144 or 23% at/over $42.50 (at Sep12 expiration)
Profit Range: $42.05 + (by Sep12 expiration)
Suggested downside stop: @ $42.97

Speak Your Mind