Options Wonderland

[leemalone2k3]

Well the play was bullish in nature. When you buy the 45's and sell the 50's in a single trade, you are hedging your losses while limiting your gains. You would want the stock to close above 50 at expiry to get a max gain of 2.88/share.

Dont know if you are familiar with debit and credit spreads but heres how you determine the max gain. Take the difference in the strike prices and subtract the debit on the trade.
50.00-45.00= 5.00
5.00-2.12= 2.88

So if LDK closes at 50.00 or higher on expiry, the gain woudlve been $2880.00. I was happy to bring in 27% of that max gain in a day.

I'm still holding a 10 45 puts I purchased for 3.30 (now worth 2.90). Monday I plan on selling the 50.00 puts against them if the price continues to climb to cover that loss. They are selling for 5.40.
Should turn into an interesting play.