POT Option of the Week

Month: Jun 2009

Purchase PVZFO (75 call)

Sell PVZFP (80 call)

Cost Per Lot: $2.50 ($250)

Keep the spread within $2.50. For our example below we will use a purchase order of 10 lots.

Let’s look at it this way. If Potash closes at $80 or above on June 19th, 2009 your position will now be worth the full $5 (the difference between the two strikes, ie 80 – 75). If the position is purchased for the estimated $2.50 then you will have created a profit of $2.50, a straight double.

To replicate this profit with Potash stock purchased today at $80 each, POT would have to close at $160 on June 19th to create a double scenario.

Which is the safer bet for a bullshit Potash Corp investor? That POT will be $80+ on June 19th or $160+. For more options information or learning materials you can simply check out the google search engine or check out the google options specific ads on this page.

Potash Option of the Week: 75 – 80 Bull Call Spread Jan 2010

Comments are closed.