Stock / Symbol: [private_monthly]Aruba Networks / ARUN[/private_monthly]
Price at trade opening: $22.79
Option Strategy: call back spread
Max Risk: $540 (at Jan expiration)
Max Reward: unlimited
Profit Range: $27.70 + (at Jan expiration)
Reasoning: We like both the fundamentals and the technical outlook for [private_monthly]ARUN[/private_monthly]. We're expecting a big pop in the stock when they report earnings on November 17th. We'll look to close out the trade the day following their earnings release. If we're wrong, and the stock goes down, the most we can lose is $40. The only real risk for this trade comes if we hold it through January expiration, and the stock has not moved to a point higher than $25.
Trade Details:[private_monthly]
Sell -2 ARUN Jan11 22.5 Call @ $2.20 = ($440.00)
Buy 4 ARUN Jan11 25 Call @ $1.20 = $480.00
Requirements:
Cost/Proceeds: $40.00 net debit
Option Requirement: $500.00
Total Requirements: $540.00
Estimated Commission: $12.95
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Chart:[private_monthly]
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