The Dow and S&P spent most of the trading day see-saw'ing around positive and negative territory before closing slightly negative for the session. However, the real money was made in technology AGAIN....anyone see a pattern here? :)
Once again Priceline defies odds by moving higher and is taking the poor unfortunate souls caught between a short squeeze to the cleaners. The fact that the stock still has a considerably high short interest, I continue to believe that along with strong fundamentals of the Company will continue to push the stock higher. The guys at Benchmark Co agreed and this morning raised their price target from $320 to $384!!
So how do we get a piece of some of this action? Trying to buy just 1,000 shares of PCLN will cost us in the neighborhood $335,000!! Any guesses on what other "Options" we have? You got it, we're going to check out the option chains! :)
The October 350 strike is currently trading at a Bid of $9.60 meaning that 10 contracts (representing 1,000 shares of potential upside) would cost just $9,600 + commissions. Not bad is it? However, if we sell the $360 strike against it (creating a call spread), our net trade would cost us just $3.10 but also capping our upside at $10 or close to 3x! Who's complaining??? :)
Ok so here's the trade:
Buy: Oct 350 @ $9.6
Sell: Oct 350 at $6.5
Net cost of Spread: $3.10
Max Upside: 3x!
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