David, Note that I'm an option amateur but I sure would like to take a stab at the problem. First, here's the daily chart:
stockcharts.com[w,a]daclyymy[dc][pb20!b50][vc60][iUc20!Ug!Uh14,3]
Are you bullish? If so, you could spend part of your in-pocket options profit on a higher call such as the July 25 or 30 and still have a small credit. I also thought you could roll out to Jan 02 calls and cover your Jul call, but I don't see those being traded for AMSC. Anyway, you're losing zone is an expiration price between the 22.5 call and whatever call you buy (25 or 30 in this example). Also note that the July's expire sooner than October, so there's a time gap as well.
Are you bearish? Use those premiums to buy puts and create a hedge wrapper. The Jul 22.5's are about $2 and the Oct 22.5's are 4.00 (no volume on these today that I see). Let's see, your basis is $19. If it closes below 22.5, that's 22.50 - 19.00 = 3.50 gross profit. You already have 2.80 in hand less $4.00 if you buy those Oct 22.5 puts for a debit of $1.20. So that's $3.50-$1.20 = $2.30 profit after selling the calls and buying the puts assuming you exercise the put.
If you were to be called at 22.50, I believe it's the same scenario; $2.30 profit. Basically, a 10% profit for what looks to be a no-risk situation between now and October. Personally, I'd do that and forget about it. (Actually, I'd probably trade those options in and out around the position between now and October.)
Here are the delayed quotes I'm working from. Was too lazy to look up the realtime quotes.
finance.yahoo.com
To the experts here, please point out the errors in my analysis. :-)
Thanks,
Sam |
