Position Update – COP

on 05 7, 2010

In the week ahead from 4-26 we talked about taking profit in a oil stock -COP.  We had uncovered it via an analysis of the oil index and the technical picture jumped out at us.

On 4-26, we suggested rolling the May 55 Call to the June 60 call to lock in profit.  The stock has since fallen off from a high of $60.53 to roughly $54.3 today May 7th.

Results of Trade Below Chart

Results [private_free]


The June 60 Calls are still trading for $0.63 because implied volatility has popped  from 26 to 41.

After the initial roll we locked in a profit of $2.57 and rolled up for the same cost as our initial trade. Now we have ability to get out of the stock that is down over $5 and the option has only lost half of it’s value.  This is a nice little gift.

Bought the May 55 calls for $1.10

Sold the May 55 calls for $3.67 Profit of $2.57

Bought the June $60 calls for $1.13

Sold June $60 calls for $0.63 Loss of $0.50

Total Profit is $2.07  on a $1.10 investment. This is 88% return on investment.

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