InterDigital Inc (IDCC)

[redbarn]

Seeking comment on the following option leverage strategy for those who are long on idcc:

1) After buying, say for illustrative purposes, 1000 shares of idcc @ $34.80;
2) You sell 1 Feb. 40 call which is now priced at $1.00, so you get $100.
3) Now buy 6 Feb. 35 calls which are now priced at about $.15, so your cost is $90. The buy and sell calls almost offset each other after commissions for all transactions.

Now let's look at the possible outcomes when the calls expire on February 16th:

1) At $35.00, you will break even;
2) Below $35.00, you will have an unrealized loss;
3) Between $35.00 and $40.00, the 40 calls will expire worthless and the 6 Feb. calls will be worth 6X the shares' price over $35.00. And your shares will be purchased at $35.00. So you will have a net gain.
4) Finally, if at expiration idcc is over $40.00, you can elect to either exercise the calls or sell them, or choose a combination of both. In any event you have made out like a bandit.

Please tell me what have I missed in this strategy?