Friday, June 22, 2012

New Trade CELG

So the Goat pointed out a potential Kirby trade. CELG opened down 6 points and based there. Here are Goats reasons for the trade can be found here   He asked me to take a look at an option trade. I happen to think that ratios are an excellent vehicle for these Kirbys so I put on the CELG Jul 62.5/67.5 for a .64 debit.
The trade is profitable between 63.15 and 71.85 with max profit of 4.36 at 67.5 at expo. Risk to the downside s the amount paid for the debit, .64. Risk to the upside is inlimited. I repeat Risk to the upside is unlimited. Losses begin at 71.86 and acrue at the rate of 1 point per spread to the upside.

The upside loss can be capped by purchasing a 72.5 call. This will increase the debit, but losses will be maxed out at the debit price.

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