Stock / Symbol: [private_monthly]Wal-Mart / WMT [/private_monthly]
Option Strategy: calendar call spread
Trade entry date: Apr 6
Price at trade entry: $53.03
Price at this post: $55.90
Reasoning: This stock has performed beautifully and our position is currently up over 50%. THIS CO REPORTS EARNINGS TOMORROW MORNING, so if you want to be safe, take your profits here. As we see it, [private_monthly]WMT [/private_monthly] can get as high as $58 following earnings / by this Friday when the May calls we sold expire, which will have us at about break even on the trade. Any higher, and we'll start losing money, but not too much. Since we're likely to not lose too much on this trade, we're going to hang on to this trade through earnings and gamble that the stock will come back down, closer to our sweet spot of $55.
If the stock is trading under $55 by the May 20th expiration, we'll close out the position if we're up at least 10%. If not, we'll look to sell the June calls the following Monday.
Current Position:
[private_monthly]
Long 6 WMT Sep11 55 Calls
Short -6 WMT May11 55 Calls
for a net debit of $0.78 per contract
[/private_monthly]
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%
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