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Hello Raymond,
Thank you, now I can see then.
Best regards,
Alex mailto:alex_bell@xxxxxxx
Thursday, February 12, 2004, 4:30:20 PM, you wrote:
RR> Hmm. I thought I did post them as GIF's but here they are again.
RR> Good luck and good trading,
RR> Ray Raffurty
RR> -----Original Message-----
RR> From: Alex Bell [mailto:alex_bell@xxxxxxx]
RR> Sent: Friday, February 13, 2004 4:44 PM
RR> To: Raymond Raffurty
RR> Subject: Re: [RT] Calendar Spreads
RR> Hello Ray,
RR> Thanks for the post but I can not open attachment winmail.dat Can you
RR> please re-post attached chart(s) as a .gif e.g.?
RR> Best regards,
RR> Alex mailto:alex_bell@xxxxxxx
RR> Thursday, February 12, 2004, 2:41:14 AM, you wrote:
RR>> Hi Rt's,
RR>> I have recently been exploring calendar spreads using stocks other than
RR> the
RR>> QQQ (and similar vehicles). In case someone does not know a calendar
RR> spread
RR>> is buying a distant expiration call (or put) option, often a LEAP, and
RR>> selling a closer expiration call (or put) at the same strike or higher
RR> for
RR>> calls (lower for puts). The idea is that the LEAP acts as a low cost
RR>> substitute for owning the underlying stock, while the short option
RR> generates
RR>> cash.
RR>> I started by looking for stocks with low cost Jan. '06 LEAPS and
RR> relative
RR>> high calls expiring in Sept '04. One that immediately popped up is
RR>> Bristol-Myers Squibb (BMY) currently trading at $30.05 per share. The
RR> BMY
RR>> Jan '06 30 Call (WBMAF) is bid at $3.70 or $370.00 per contract. The
RR> BMY
RR>> SEP 2004 32.5 Call (BMYIZ) ask is $1.05 or $105.00 per contract. This
RR> means
RR>> that if one where to buy 1 WBMAF and sell 1 BMYIZ the net cost would be
RR> $370
RR>> - 105 = $265.00 per contract.
RR>> As you can see from the attached chart this produces a very favorable
RR>> risk/reward profile. Trading 5 contracts of each call the maximum loss
RR>> would be $1325.00 while the maximum profit would be $2195.00 and the
RR>> position would be profitable any ware with BMY trading between $24.32
RR> and
RR>> $59.18.
RR>> Comments anyone?
RR>> Good luck and good trading,
RR>> Ray Raffurty
RR>> Yahoo! Groups Links
RR> ----------------------------------------------------------------------------
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