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Tuesday, June 16, 2009

6/15-6/19 info

The stock had fallen below the strike price on Wednesday, but at the end of trading on Thursday the stock was pushed past the strike price and stayed over on Friday. The crazy thing is that this was done without any news for the company.

Now the July options get set for current month movements. The stock is floating around the strike price. There are 19 trading days (4 weeks minus July 3) left until expiration. Currently the option is priced almost double what I sold it for indicating a positive move in the future. But because this is the current month, time value will diminish at an accelerating rate. Currently the stock has moved 25% up and the option has doubled. The option price move has only been 60 % of the upside move for the stock price.

But because of the option activity, and the expected news regarding the company's products this month, the option could be in the realm of guaranteed assignment at the end.

This would allow the profit from the stock to be added to the premium received from the option to be added to the continued collected capital for the accout. This puts the account in a much more favorable position to choose from a greater pool of stocks and the possible use of an added strategy. That strategy is selling in the money calls at a premium. But we will see.

As always, I do not fully divulge information on open trades. When the trade ends, I will give out the rest of the details (stock name, price purchased, call purchased, news on company/ETF, chart info) that sort of thing. It will be detailed with charts and progress reports. Please feel free to ask questions and I will answer them the best I can without endangering the trade.

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