Trade of the Day (CEDC) 2.6.2012

Reason I like this Trade: I like this trade when I saw a customer buy 1500 CEDC Feb 5 Calls for $.65 when the stock was trading $5.52.  CEDC disturbutes alcohol products in European countries.  I guess I should have bought these Calls as well, but I decided to sell the Puts for $.20 instead.  The stock has rallied $.40 to $5.92 and the Calls have outperformed the price of the Puts.  I will leave these Puts on until expiration, as I do not get “LONG” stock until CEDC sells off 20% in the next 9 trading days.  If you have any questions please email me at  [email protected].

UPDATE 2.7.2012 With the stock selling off $.20, these Puts are worth $.175.  The longer until expiration the less these Puts will be worth.  With the stock looking strong above $5, I will leave these Puts on until expiration, so I do not chop my P&L with commissions.

UPDATE 2.8.2012 With the stock rallying to $6 and I realize that I should have bought the Calls instead of selling the Puts.  These Puts are now worth $.10, but will leave them on until expiration, so I do not chop my P&L up with commissions.  Moving to the next trade

UPDATE 2.14.2012 With the stock raging abovew $6.25, these Puts are basically worthless, but no trade is a complete winner until it is closed, so waiting until Friday and will not be taking any of this position off until then.

UPDATE 2.16.2012 With these options expiring tomorrow, these will be worth zero and I turned a nice profit and moving on to the next trade.