Stock / Symbol: [private_monthly]Visa / V [/private_monthly]
Price at trade post: $77.82
Option Strategy: diagonal call spread
Max Risk: $756
Max Reward: $184 (24%) at $80 or unlimited under
$66 by May 2011 expiration
Profit Range: $0 - 66.90 and $77.63 +
Uncalled Return: 6%
Reasoning: We're expecting this stock to trade fairly sideways, even with earnings coming up on May 5th. Our price target is $80 by May expiration. We also like that it's 200 day support is only 6.8% below it's current level. However, with the upcoming earnings, we are adding a protective put to the trade. If the stock is trading under $80 by May expiration, we'll then look to sell a June call against the position.
Trade Details:
[private_monthly]
BTO 1 V Sep11 72.5 Call
Sell -1 V May11 80 Call
Buy 1 V May11 72.5 Put
for a net debit of $7.56 per contract
Requirements:
Cost/Proceeds $756.00
Option Requirement $0.00
Total Requirements $756.00
Estimated Commission $38.85
[/private_monthly]
Chart:
[private_monthly]
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