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Genworth Financial, Inc. Message Board

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  • westboro_trader westboro_trader Aug 9, 2010 3:02 PM Flag

    west..your battleplan

    Jim,

    I like it. I understand battle plans well..FYI, I have another 10K in my trading account that I wish to trade or have open for an extrodinary event...say a buyout. Ha! Saw your comments but who knows.

    West

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    • west

      having otm leaped covered calls on an actual buyout stock is a gift when it happens as long as the takeover price isnt huge.

      lets say you had sold jan $15 2012 leaps on gnw for $2.25..an effective $17.25 selling price

      IF gnw had an actual all cash buyout with a $16.25 price, a $3 premium to today...

      what would happen is gnw would soar to $16.25..the done deal price.

      your sold jan $15 calls would drop to $1.25... thats the maximum they would be worth at expiry to the OWNER of the call.

      your long shares increase $3 and the sold shorted calls drop $1

      you would make a $4 profit without having to wait 17 months by simply closing the positions WHEN you chose to do so for tax purposes, 2010, 2011 or 2012.




      jim

 
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