Stock / Symbol: [private_monthly]Broadcom / BRCM [/private_monthly]
Price at trade post: $40.56
Option Strategy: diagonal call spread
Max Risk: $934
Max Reward: $579 or 62% by May 2011 expiration
Profit Range: $40.54 +
Max Profit at: $45
Uncalled Return: 20%
Reasoning: This company has solid fundamentals and we believe it has found support at its 200 day average. If the stock is trading under $45 by May expiration, we'll have taken in a 20% uncalled return and will then look to sell the June calls.
Trade Details:
[private_monthly]
Buy 2 BRCM Jan12 40 Calls
Sell -2 BRCM May11 45 Calls
for a net debit of $4.67 per contract
Requirements:
Cost/Proceeds $934.00
Option Requirement $0.00
Total Requirements $934.00
Estimated Commission $12.95
[/private_monthly]
Chart:
[private_monthly]
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