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James M. Johnson wrote:
>
> RT's,
>
> I need some advice about the best way to close a small but profitable
> stock option position.
>
> I am long two September 30 calls (NBQIF)for NBTY (Nature's
> Bounty--vitamins and such). The stock has risen dramatically in the last
> three days and closed at 34 1/2 on Friday (not a bad ride considering
> the way everything else moved on Friday). I bought the options at 2
> and they are now bid 5 with five weeks to expiration. The stock
> showed no signs of turning, so I think there is still further upside
> to this advance.
>
> I think some of my options (no pun intended) are:
> a). sell both at 5 and run to the bank with the $600 minus comissions
> b). sell one at 5 to cover the initial cost of taking the position
> hold the other to see if the stock continues to rise, making the
> remaining position a "free trade."
> c). put in a tight sell stop on both, say at 4, and hope the advancement
> moves forward before a pull-back, and reconsider again on Monday
>
> The option is fairly thin, with open interest just above 400. Daily
> volume is between none and 50, so liquidity seems to be a problem.
> Even with the current bid at 5, the last trade was at 3 1/2, so the
> market moves around a lot without much trading.
>
> I hate to let an easy double turn into a loss. My breakeven would be
> for the stock at 32 at expiration, minus commissions. I'm leaning
> toward selling one at 5 and letting the other ride with a tight stop.
>
> Does anyone have any advice about the best way to preserve
> my profit without an early exit?
>
> Thanks,
>
> James M. Johnson
hi james,
here is a thought..
1)close out your position
2)take a position in the 35's(or 37 1/2's)
it depends on the cost.....but you will have a profit and still have
calls(at a higher price)...it depends on transaction costs and the price
of the new calls.
good luck
rich t
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