Stock / Symbol: Bank of America / BAC
Option Strategy: [private_monthly]diagonal call spread[/private_monthly]
Price at trade post: $15.74
Reasoning: Here's a bullish play on BAC following this morning's earnings announcement. As there isn't much premium in BAC's options, an ITM diagonal is a nice way to generate some decent yield with similar risk characteristics to a covered call. This trade has a delta of 89, a positive theta of 1 and a negative vega of 0.45.
Trade Details:[private_monthly]
BTO 2 BAC Jan15 12 calls
STO -2 BAC Aug14 16 calls
for a max net debit of $3.70 per contract (day order, limit order). The mid is currently at 3.62. If not filled today, ok to try again tomorrow.
Requirements:
Cost/Proceeds $740
Total Requirements $740
Estimated Commission $6
[/private_monthly]
Max Risk: $740
Max Reward: $65 or 8.78% (at current volatility level) [private_monthly] at/over $16 by Aug 15
Profit Range: $15.65+ by Aug 15
Suggested Downside stop: @ $15.15
Suggested Upside stop: NA
[/private_monthly]
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