Stock / Symbol: Nabors Industries / NBR
Option Strategy: calendar call spread, converting to diagonal call spread
Trade entry date: Apr 4
Price at trade entry: $16.60
Price at this post: $14.50
Current Position:[/private_monthly]
Long 5 NBR Sep12 18 calls
at an effective cost of $0.95 per contract
[/private_monthly]
Analysis / Adjustment: In hindsight, we should have closed this one out when we were up about 10% on it back in the end of April / first of May, but didn't because we were shooting for 20%. [private_monthly]
NBR is still very much under valued at this level and should at least get back up over 16 this year, so we've going to extend this trade. We're starting by rolling our long calls to the Mar13 15 strike calls; these calls have a delta of .54. Then, we're going to write some Sep 17 calls (current delta of .19) against the position to lower the cost a bit. We're lowering the upside stop to $18.50, as if triggered, should exit the trade at about break even. [/private_monthly]
Trade Adjustment Details:
[private_monthly]
STC 5 NBR Sep12 18 calls
BTO 5 NBR Mar13 15 calls
for a max net debit of $1.90 per contract (GTC, limit order).
then,
STO -5 NBR Sep12 17 calls
for a min credit of $0.20 (GTC, limit order)
----
or, if you're new to this trade, then:
BTO 5 NBR Mar13 15 calls
STO -5 NBR Sep12 17 calls
for a max net debit of $1.80 per contract (GTC, limit order)
Max Risk: $1,325 (originally $465)
Max Reward: $275 or 20% by Sep 21
Profit Range: $16.15 to $19.70 + by Sep 21
Suggested Upside Stop @: $18.50
[/private_monthly]
Non-members, click here for access
Speak Your Mind