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Friday, January 8, 2010

one week to expiration


The current trade will expire at the end of next week. The stock is currently above the purchase price but below the stock price.

If the stock closes below the strike price, the account will probably look to selling out of the money calls for February or March for this stock. This action will drive down the cost basis for the stock. The only way that the account would sell the stock and look for a completely new trade is if it found a stock with a call that had a higher time value attached to it than the cumulative time value of the current trade.

If the stock closes above the strike price at the end of next week, the shares will be called away. The account has already started to look at stocks available to trade for the months of February and March.

Right now, the stock would need to move up five percent next week in order for it to reach the strike price. It did make a five percent move this week without any news so it is possible.

- The account does not fully divulge all information on companies that have open trades. This is to protect current trade. When the trade on a particular stock ends, the account will give out the rest of the details (stock name, price purchased, call purchased, news on company/ETF, chart info, etc.) Please feel free to ask questions and the account will answer them the best way possible can without endangering the trade. If you have any info regarding call selling, be sure to comment or send an email.

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