Postcard To My Readers
Saliba is still on vacation. This morning he phoned in the following comments
addressed to those of you who are following our option positions in either or
both of the CSCO Jan 37 Â½-42 Â½ and the EXTR Jan 50-55 call spreads.
Greetings from not-so-sunny Arizona. Well, expiration is coming up fast, and we
all know that exiting option spreading strategies can be both tricky and risky if not done properly.
PowerRating) stock plummeted $8 after the close
on disappointing earnings and is now trading 39 1/4. The Jan 50/55 call spread
is trading 1 3/8-1 5/8.
PowerRating) is still right there, with stock trading at
39 3/8, slightly up from yesterday’s close. Jan 37 Â½- 42 Â½ call spread is
trading 1 13/16-2 1/8
For those who haven’t taken any money off the table and are still 100% in the
strategies, the suggestion for EXTR is to sell out one halfÂ “(Â½)”
of your quantity of Jan. 50 calls and buy Jan 60 calls, effectively leaving you
with half as many of the Jan50/55/60 butterflies and Â½ your money off the
table. It appears that EXTR earnings were in line, but not good enough for the
stock to rally on as other networking stocks have. (Note: EXTR earnings were
originally slated to be announced on expiration Friday, thus my interest in
holding it until expiration.)
As for CSCO, currently the spread looks intrinsically to be pointing to a double
for those who haven’t modified it at all. I would have scaled it out offering it
in the market starting at $2 Â½ .
That’s all for now, I just wanted to give you all a little heads-up. See you on