Wednesday, October 5, 2011

Cisco - Coverd Calls......Again

CSCO hit $16.50 this afternoon. Yes, that is right. In less than 24 hours Cisco went from $15 to $16.50.  Gee...I wonder if the "value" of the company change by 10% in the last 24 hours? 
You really have to love those efficient markets that factor in all available information to identify a "true" price.
In any event, CCI sold the  Oct $16 calls for $.78 this afternoon against our long Jan 12 option position.
Yes, that is the same trade that we just closed  on Monday.  If it worked once, why not again!

CCI still thinks Cisco is a "value" stock, but now that the overall market has moved down,  there are a lot of "value" stocks to choose from.  Some of them likely have greater growth potential than Cisco.  So we are content to have this last lot called away at Oct expiration for an effective price of $16.78, and redeploy  the capital to another trade.  Conversely, if the stock decides to retrace some of its 10% recent pop, we will also be content to skim some short-term premium off this trade......again.

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