Stock / Symbol: [private_monthly]Altria Group / MO [/private_monthly]
Price at trade post: $23.61
Option Strategy: diagonal call spread
Max Risk: $624
Max Reward: $349 or 56% by Mar 2011 expiration
Profit Range: $22.63 +
Max Profit at: $24
Reasoning: This company has solid fundamentals and should find support has at its 200 day average. Additionally, we like that our break even on the trade is at $22.63, or about 4% lower than where the stock is currently. If the stock is trading under $24 by March expiration, we'll have taken in a 13.33% uncalled return and will then look to sell the April calls.
Trade Details:
[private_monthly]
Buy 4 MO Jan12 22.5 Calls @ $1.80 for $720.00
Sell -4 MO Mar11 24 Calls @ $0.24 for ($96.00)
for a net debit of $1.56 per contract
Requirements:
Cost/Proceeds; $624.00
Option Requirement: $0.00
Total Requirements: $624.00
Estimated Commission: $12.95
[/private_monthly]
Chart:
[private_monthly]
Flash Player 9 or higher is required to view the chart Click here to download Flash Player now[/private_monthly]
Non-members, click here for access
Speak Your Mind