Break-even: I break-even on this trade if RENN closes at $5 or $7 on May 18, 2012.
Unprofitable: I lose money on this trade if RENN closes under $5 or above $7 by May 18, 2012. The most I can lose on this trade is the amount I paid for the Spread $.30.
Reason I Like This Trade: RENN has earnings after the May expiration, so anytime I can buy an earnings month and sell a front month options for as small premium as this, I think it is a good trade. If RENN stays within a $1 range for the next 7 trading days then this trade will work out.
UPDATE 5.10.2012 With time on my side and RENN looking as if it will not break out from $6, I will leave this Spread on until expiration.
UPDATE 5.11.2012 This spread is not increasing in value as days go by, I thought it would. Hopefully next week the May options will Decay more.
UPDATE 5.14.2012 With the BIG Facebook IPO on Friday, the volatility is jacked in RENN front monrth. Hopefully the stock will not move much and this trade will be Profitable.
UPDATE 5.15.2012 This spread is finally working out the way I thought it would. It is currently worth $.45, but as stated above I will leave it on until Friday.
UPDATE 5.16.2012 I will once again leave this Spread on until Friday, but this Spread is currently worth $.40
UPDATE 5.21.2012 There was a reason why front month volatility in RENN, bc movement was expected. With RENN selling off under $5, this spread went to $.25. I need a rally higher in order and there is a chance when RENN has earnings this month.
UPDATE 5.22.2012 I am looking to take this trade off if I can get a rally in Facebook and RENN or even a POP in earnings.
UPDATE 5.24.2012 This stock has sold off and I am looking to take this position off at any rally.
UPDATE 5.29.2012 I still have this trade on and looking to work out of it for a small loser.
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