Stock / Symbol: ATT / T
Option Strategy: Put Spread
Price at Trade open on Sep 7th: $27.44
Price at Trade close: $29.14
Reasoning: We've finally come to terms with the fact that ATT is strong and will most likely not move below our break even price of $26.68. We're going to close this trade out here for a loss. At least we played puts instead of simply shorting the stock. Had we shorted 500 shares of T, we'd be down $850 and subject to unlimited losses. Also, had we just bought the 28 strike put, we'd be out $950. Our put spread capped our max loss at $645.
Trade Details:
BTC -5 T JAN11 25 PUT @ $0.06
STC 5 T JAN11 28 PUT @ $0.25
for a net credit of $0.19 per contract
Max Risk: $645
Realized Loss: $565
Chart:
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