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January 10, 2013

$V Weekly Trade

Jan 10, 2013
  • Strategy: Jan/Feb 160 Call Calendar spread
  • Underlying: V (Visa - NYSE)
  • Trade: Sell to Open Jan'13 160 Call; Buy to Open Feb'13 160 Call
  • Trade price: $2.40 debit
  • Margin: $2.40 per spread
  • Profit target: 10%-20% of margin (.25¢-50¢)

Risk Profile:

Trade Duration: Jan'13 options expire next Friday (1/18/13). Best case scenario for this trade is Visa trades around 160 by Jan expiration. We are selling front month options and buying back month options to take advantage of Theta or time decay. Our long options will decay at a slower pace and any increase in volatility should help this trade reach our profit target sooner. We will constantly monitor this trade to determine if/when adjustments need to be made. 
Update 1/12/12:
On 1/11/13 we closed this position by selling this calendar spread for $2.65 (+.28¢ or 11.81% Return)