hoss18 July 31st, 2012 at 3:17 pm
Phil – On July 16th I bought a CRUS Jan13 25/30 BCS for $2.04 and sold the Jan13 20 Put for $2.00, giving me a $5 spread for $0.04. Obviously, with their earnings and guidance, they have blown through my spread and the value of the puts has plummeted. The speed of the change has left me wondering the best way to adjust the position. I'm thinking about the following:
Selling the 25 C for $13.35(originally bought for $4.94)
Buying Jan 13 35/45 BCS for $3.88, and then Selling the Jan 13 Put for $2.65 giving me $10.00 spread for $1.23, and putting $9.47 in my pocket. However, it still leaves me with the sold 30 calls from the original BCS, just using the value of the second BCS to cover the sold calls.
Or would I be better off buying the Jan 13 29 calls for $10.40 and selling the 25 Calls for $13.40 putting $3.00 in my pocket and making the spread a $1.00 BCS?
Just wondering the best approach when a BCS suddenly goes hugely in your favor. Or is it best to just ride it out(which seems like too big a risk given the overall market conditions, which could easily drag this high flyer down).
July 31st, 2012 at 3:17 pm
Phil – On July 16th I bought a CRUS Jan13 25/30 BCS for $2.04 and sold the Jan13 20 Put for $2.00, giving me a $5 spread for $0.04. Obviously, with their earnings and guidance, they have blown through my spread and the value of the puts has plummeted. The speed of the change has left me wondering the best way to adjust the position. I'm thinking about the following:
Selling the 25 C for $13.35(originally bought for $4.94)
Buying Jan 13 35/45 BCS for $3.88, and then Selling the Jan 13 Put for $2.65 giving me $10.00 spread for $1.23, and putting $9.47 in my pocket. However, it still leaves me with the sold 30 calls from the original BCS, just using the value of the second BCS to cover the sold calls.
Or would I be better off buying the Jan 13 29 calls for $10.40 and selling the 25 Calls for $13.40 putting $3.00 in my pocket and making the spread a $1.00 BCS?
Just wondering the best approach when a BCS suddenly goes hugely in your favor. Or is it best to just ride it out(which seems like too big a risk given the overall market conditions, which could easily drag this high flyer down).