Position Update – COP
admin 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 $2.07Â on a $1.10 investment. This is 88% return on investment.
[/private_free]
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