Monday, October 22, 2007
Alert and a candidate
Thanks the to monster gap down this mornig followed by a nice fill, I would've received a nice trade/investment in BCR. Found the 70 Jan 09 call for $20.05. Sadly, there was no open interest for the Apr 08 calls, so I would've paid a little more for the LEAP. On the flipside, these are set up to be longer term trades and if BCR appreciates as I would expect, then the longer dated option is actually a blessing...
Now for the canididate, LIFC. It has been a runner of late, but just tanked today. Too bad I did not know about it prior to the Barchart downgrade after the close. At one point the stock was down >10%. Calls would've been the perfect trade. I would only consider a call if the stock drops to 36.75. This is another stock with no open interest for Jun 08, so Jan 09 LEAPS may be a better buy. An interesting fact: 20 Jan 09 call is $22.50 while 30 Jan 09 call is $15. With a closing price of $40.63, it would actually be cheaper (i.e. less time value) to buy the deeper in the money calls, although it would require more money up front...
The LIFC+BCR trades have shown something important. If I do end up going to LEAPS, the deeper in the money, the less time value (a given by definition), but the less leverage. It is something I will track going forward. I usually look for the smallest premium that gives a delta of 90 or so, but the trade off in time value may be important...
For now,
Masterjaz out
Now for the canididate, LIFC. It has been a runner of late, but just tanked today. Too bad I did not know about it prior to the Barchart downgrade after the close. At one point the stock was down >10%. Calls would've been the perfect trade. I would only consider a call if the stock drops to 36.75. This is another stock with no open interest for Jun 08, so Jan 09 LEAPS may be a better buy. An interesting fact: 20 Jan 09 call is $22.50 while 30 Jan 09 call is $15. With a closing price of $40.63, it would actually be cheaper (i.e. less time value) to buy the deeper in the money calls, although it would require more money up front...
The LIFC+BCR trades have shown something important. If I do end up going to LEAPS, the deeper in the money, the less time value (a given by definition), but the less leverage. It is something I will track going forward. I usually look for the smallest premium that gives a delta of 90 or so, but the trade off in time value may be important...
For now,
Masterjaz out
# posted by Masterjaz Out @ 9:19 PM 
