Fundamental:
1. Earnings report on Nov 2, 2009, AMC. Better than expected. Shares up today.
2. This is not a company with “solid” fundamental. However, all its competitors are in similar situation.
Technical: Current price 9.4.
Support around $8
First resistance at $10, Second resistance at 11.5 (50MA)
MACD tilt up, RSI up, coming out of oversold area.
Trade:
BTO Feb 2010 Strike 7.5 Call at 2.85
STO Nov 2009 Strike 10 Call at 0.55
Net debit $2.30 Maximum Risk : $2.30
Break even $8.79
Delta 32.9 , Theta 1.63, Gamma -12.18, Vega 0.77
Expectation: Price is between $10 and $10.50 at Nov 2009 expiration
PE: 20-25% ROI
SE: Bearish roll down SC to Dec 2009 strike 7.5.
Posts
Joseph,
ReplyDeleteI think it is a good trade.
The only uncertainty I see SPX is topping at 1100. We will have a rally. But there is evidence that a correction of up to 15% is coming. Unless, the SPX crossed 1100 convincingly in the next 2 weeks, I will not be entering any bullish positions.
Meanwhile, I will be using put calendar or bull put to own some good fundamental stocks when the market corrects. I like stock with steady dividends and plan to allocate a portion of my portfolio to such stocks to make around 15% annually.
Technically, CAR is on the way up. My question is how long. If this rally cannot go pass expiration this month, you will be forced to adjust. Fundamentally, the stock can break support easily in a correction
On the positive side, all rental cars company are making progress on revenues and margins because they have made to raise rental substantially over the last 6-8 months.
Comments by Ted:
ReplyDeleteJoseph, very good analysis of this call diagonal calendar. What makes this attractive is the high IV for the Nov SC that generates a good premium.
This is a short term trade. One thing I don't like about this trade is the low volume.
ReplyDeleteDid not get filled on this trade today. One of the reason is the low volume on Feb 7.5 call. The trading volume for this option is 0 today.
ReplyDeleteSince it is not easy to get filled on the option trade, I entered a ITM covered call today.
ReplyDeleteBTO Stock at 10.42
STO Dec09 strike 10 call at 1.36
Cost Base 9.06
Max profit is 0.94.
PE: Let the call be assigned. Profit is 10.3% over 39 days, 60%/year
SE: Buy protect put is the stock is below $9.
Joseph,
ReplyDeleteI like this trade.
The spread is pretty wide. You can probably get a little more ROI if you "sqeeze" in for a better fill.
My trade for CAR was assigned early. This is the one of the 3 rare occasions this year when my ITM SC was assigned.
ReplyDeleteAnyway, no complaints. I made my maximum profit of 10% in one month.