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Elan Corporation, plc Message Board

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  • mardermj mardermj Mar 13, 2005 2:07 PM Flag

    Load up, but stay off margin on this

    Buy for 7, sell an Oct $7.50 call for $2.00.

    You're in for five dollars your money, and will make 40% even if the stock stays right where it is, and doesn't move--because the two bucks you sell the call for becomes available to pay off the required dollars to buy the stock in the first place.

    Very conservative and limited upside but a way to play the next six months for fresh shares while this whole issue plays out.

    For the gutsy on margin, You'd only have to show up with $3.50, of which $2.00 is defrayed by the selling of the option, for a total of $2.00 gained for every $1.50 you put up.

    That;s a double, and the stock only has to sit there at $7.00

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