Monday, February 28, 2011

Using Options to acquiring a second lot of Xerox

Sold one lots worth of Mar $11 puts today for 44 cents net of commission.

Scenario 1 - The stock will stay below $11 over the next three weeks and the second lot will be acquired at a net price of $10.56. A price that seems attractive based on prior post, 1% below the current price and around what looks like a potential support level on the charts.

Scenario 2 - The stock moves back near or over $11 in the next three weeks. Best case the option will expire for about a 4% gain over 3 weeks, or we will keep an look-out for opportunities to cover in the even shorter term.

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