PC, Yes, the buy write would make more absolute dollars, but you are risking 6 times as much money to make it. You are putting up $35 less the $5 premium, or $30 to make $5. In a month, that is terrific, if you are convinced that Ciena can only go one way. Now if you take that $30 and buy 6 $5 calls instead, you would make $18. Of course, you still have $30 of risk, but a much greater chance of losing it all. Not only does Ciena have to go up, it has to go up on time.
I am not convinced that there is no downside in the stock, so I'll stick with the long calls in an 80/10, which is as much as I want to gamble that the slide in price has stopped.
MB |
