Stock Symbol: [private_monthly]CSTR[/private_monthly]
Price at Time of Trade: $41.50
Option Strategy: Calendar Spread
Risk: medium
Reward: limited
Reasoning:Expect that [private_monthly]Coinstar - CSTR[/private_monthly] will move up to at least $50 the end of this year. This calendar spread yields us an uncalled return of 11.97% and a called return as high as 38%. Break even on this trade is at $41.38, which is actually lower than its current level. If this stock trades lower than $45 after October expiration, we'll look to sell another near term call for another 8 - 12% yield.
Max Risk: $625
Max Rewward: $238
Max Profit achieved at: $45.00 by Oct 15th = 38% gain
Trade Details:[private_monthly]
Sell -1 CSTR OCT10 45 CALL $0.85 ($85.00) Credit
Buy 1 CSTR APR11 40 CALL $7.10 $710.00
Requirements:
Cost/Proceeds $625.00 Debit
Option Requirement $0.00
Total Requirements $625.00
Estimated Commission $12.95
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Chart:[private_monthly]
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