Moderate strength in the Indoos allowed subscribers to take profits Thursday on two more DIA Dec 9 192.50 calls. Eight of them (or a multiple thereof) had been acquired on November 20 using a 0.34 limit bid. Subscribers were subsequently advised to sell half of the options when their price doubled to 0.68; with yesterday’s sale of two more for 1.06, they now hold a position that will yield a $212 profit even if DIA plummets between now and Dec. 9 when the options expire. The potential gain is unlimited and would grow by $200 for each one-point move above 192.50. (DIA closed on Thursday at 191.95.) Trading note: We used a Hidden Pivot target for the options (see inset) to determine a target price for them of 1.12 — the high of the day, as it turned out. Not all subscribers were able to exit at that price, however, and that’s why I have used some so-so fills that were reported to calculate a new cost basis for the position. Rick’s Picks tracks trades only if subscribers have reported fills. P&L is similarly based on actual subscriber results, with gains or losses skewed toward worst-case reports. _______ UPDATE (Dec 5, 8:54 p.m. ET): We’ll play this one down to the wire, since we stand to make at least a small profit even if DIA dies in the stretch between now and Friday. Just in case bulls generate a fleeting spike, however, I’ll recommend offering one of the two calls [Correction: offer two of the four contracts still held] for 1.28, good till canceled. _______ UPDATE (Dec 7, 1:40 p.m.): Subscribers reported exiting two more contracts for 1.28 as suggested above. Imputing the gain to the two contracts we still hold gives them an effective cost basis of minus $1.08 apiece. Now, offer one of them to close for 2.25, day order.
