Monday, April 25, 2011

Covered Boeing Option

BA has "melted up" to around $75 over the last week. I guess that could be attributed to pre-earnings anticipation, a Barron's bounce from the prior weeks positive cover story, or just a bounce back from an over reaction to S&P's negative comments about US debt, or may be it is just market noise.

Last week May $72.50 puts we sold for $2.21. Today, I covered those option for $.96 including commissions. That is a $1.25 gain on risk capital or 1.7% gain in a week.

The option had achieved about 60% of the best case return. The remaining potential return did not seem worth the risk of holding into earnings on Wednesday.

Still bullish and holding two lots. However, it seems prudent to look for more insights from Wednesday's earning call before determining next steps.

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