As I mentioned under the earlier post, six analysts raised price targets on RIMM, but Goldman cut the target and took ratings down to "Sell" from "Neutral" and that's weighing on the stock.
An adjustment is necessary to June 75/85 call spread.
- Buy back to close June $85 calls for $0.50
- Sell to open April $75 calls for $0.35
The effectively converts the trade into June/April $75 calendar. Similar to how we have been playing AAPL and V, if the stock makes a run back above $75 by April expiration, then we will roll April $75 calls to May $75 or $80 depending on how much premium we can collect. And then we will have another chance to convert to call spread in June.
Folks, the purpose of all these trade adjustments is to reduce cost while staying in the game when a trade doesn't pan out. If done properly, overtime you could be wrong on the direction and still come out on the right side on profits.
I just the filled order as described above. Good luck!
About Me
- Fahad Khalid
- Chicago, IL, United States
- I have Masters in Business (Accounting and Finance 2003) from Michigan State University. I have been trading the market since 1998. Prior to picking up trading as a full-time career in 2008, I was a management consultant at Alvarez & Marsal and Conway MacKenzie for four years. I provided turnaround, crisis management and restructuring services to financially distressed firms. Prior to working in turnaround, I worked in Audit & Assurance at Deloitte & Touche for two years. Trading in the market has always remained my side business ever since I started college. 90% of the time, I trade through options. I love volatility skews and positive Theta plays. While I make a lot of directional bets, in general my favorites are to take advantage of high implied volatilities through calendar or butterfly spreads and vertical credit spreads. I never buy straight calls or puts and I do a lot of exotic multi-leg option trades.
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