Calls and Puts for Income Message Board

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Strategies & Market Trends : Calls and Puts for Income

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To: Gottfried who wrote (4673)	10/31/2010 1:13:40 PM
From: Debt Free	Read Replies (3) of 5891

Looking for thoughts about this activity on PFE Stock closed at $17.42 Buy stock @ $17.42 Sell Nov 17 Call @ $0.54 Sell Nov 17 Put @ $0.28 Collect dividend on Nov 4th (Thursday)@ $0.18 Maximum upside is $0.58 - assumes stock closes above $17.00 then the total premium on the above is $0.58 ($0.12 + 0.28 + .18) or 3.3% for less than 3 weeks time Protected downside is $16.42 -- $1.00 lower than today (0.54 + 0.28 + 0.18) or 5.7% once stock goes ex dividend, would probably enter a stop or sell somewhere between 16.9 & 17.00 for protection on the trade. Would likely buy back the puts and maybe the calls as well (depends on price and time remaining til expiration. Unless the stock tanks (always a possibility) then this appears to provide a very reasonable risk / reward profile.

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