Stock / Symbol: [private_monthly]Apache / APA[/private_monthly]
Option Strategy: diagonal call spread
Price at trade entry: 124.58
Price at this adjustment: 119.60
Reasoning: With [private_monthly]Apache[/private_monthly] reporting earnings tomorrow morning, we're adding a put to protect against a near term drop in the stock. This does increase the amount we're risking on the trade, thus limiting our return percentage, but we'd rather be safe than sorry coming into earnings.
Trade Details:
[private_monthly]
Buy 1 APA Feb11 120 Put
for a net debit of $2.15 per contract
Requirements:
Cost/Proceeds $215.00
Option Requirement $0.00
Total Requirements $215.00
Estimated Commission $12.95
[/private_monthly]
Max Risk: $949 (adjusted up from $737)
Max Reward: $400 or 42% (adjusted down from $457) by Feb 2011 expiration
Profit Range: $0 - 117.27 and $123.20 - $143.80 (adjusted from $122 - $148) by Feb 2011 expiration
Max Reward Price: $130 at Feb 2011 expiration
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