Stock Symbol: [private_monthly]CTXS[/private_monthly]
Option Strategy: bear call spread
Max Risk: $590
Max Reward: $410 / 69%
Profit Range: $0 - $62
Max Reward at: $0 - $60
Max Risk at: $65 +
Reasoning:
[private_monthly]Citrix - CTXS[/private_monthly] has benefitted from being in one of the hottest sectors in the market, cloud computing. Yesterday, Equinix (ticker: EQIX) reported and they were slightly light on revenues. Normally, a small miss like this wouldn’t send a stock down drastically; However EQIX fell 30%. This was largely because of the fact that the entire cloud computing group was overbought. When EQIX fell, it took down the rest of the cloud computing group, including [private_monthly]Citrix[/private_monthly]. We now have a situation where the air is out of the momentum bag for the cloud computing group, and we anticipate further pressure on these stocks.
As long as [private_monthly]CTXS[/private_monthly] closes under $60 by November expiration, we'll realize the full 69% gain.
Trade Details:
[private_monthly]
Buy 2 CTXS NOV10 65 CALL $2.25 $450.00
Sell -2 CTXS NOV10 60 CALL $4.30 ($860.00)
Requirements
Cost/Proceeds ($410.00)
Option Requirement $1,000.00
Total Requirements $590.00
Estimated Commission $12.95
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Chart:
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