Stock / Symbol: E M C Corp / EMC
Price at trade post: $24.36
Option Strategy: [private_monthly]vertical call spread[/private_monthly]
Reasoning: EMC, which offers enterprise storage systems and software and also owns an 80% stake in VMW, has seen it's stock drop nearly 19% from its recent high of $30 in March. This is a solid company, wtih good revenues, and a fundamental value of over $30. We think the stock is oversold and will rebound here. After looking at diagonals, iron condors, broken wing butterflies, and bull put spreads, we've decided on a simple vertical call spread as the amount risked is nearly equivalent to the loses we'd have realized on the other strategies at the necessary stop levels. [/private_monthly]
Trade Details:
[private_monthly]
BTO 4 EMC Jul12 24 calls
STO -4 EMC Jul12 25 calls
for a max net debit of $0.53 per contract (current bid $0.49 / ask $0.52) (day order, limit order). If you're not filled today, try to get filled Monday but not after that.
Requirements:
Cost/Proceeds $204
Option Requirement $0
Total Requirements $204
Estimated Commission $12.95
[/private_monthly]
Max Risk: $204
Max Reward: $196 or 96% by Jul 21
Profit Range: $24.52 + by Jul 21
Suggested Downside Stop @ $23
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