Stock / Symbol: Coca Cola / KO
Price at trade post: $67.85
Option Strategy: [private_monthly]call ratio calendar spread[/private_monthly]
Reasoning:[private_monthly] Since last April, KO has traded in a tight range, between a 63 and 71. We're putting on a version of a calendar spread designed to reach maximum value with KO at $67.50 by February expiration, and offer us some protection should the stock break out to the upside. The maximum yield on the trade is 63% by Feb 17 but we'll look to close out the trade earlier with around a 20% profit. [/private_monthly]
Trade Details : [private_monthly]
BTO 8 KO May12 67.5 Calls
STO -7 KO Feb12 67.50 Calls
for a net debit of $9.48 per contract (GTC, limit order)
[/private_monthly]
Requirements
Cost/Proceeds: $948
Option Requirement: $0
Total Requirements: $948
Estimated Commission: $18.75
Max Risk: $948
Profit Range: $65.65 – 70.40 (Feb 17)
Max Profit: $600 or 63% @ $67.50 by Feb 17
Suggested Downside Stop: @ $63.30
Suggested Upside Stop: @ $70.50
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