[Buying LEAPS on Taiwan Semiconductor (TSM)/Buying '06 $5 calls (WMGAA)/Limit $2.50]
Dear Member,
On a bounce from support I am buying the Jan '06 $5 calls (WMGAA) on Taiwan Semiconductor (TSM)at a limit of $2.50. TSM has been channelling between about $6.89 and $7.69. The option I am buying has a delta of .83 so, I should make about 65 cents if it runs to recent resistance. I will set my initial stop contingent on the stock going below $6.75. It is currently trading at $6.93 so my risk is roughly 15 cents. That gives me a 4.3 reward to risk ratio on a small investment.
DISCLOSURE: At the time of publication, I have no position in the referenced options or the underlying stock.
Sincerely,
Bill Kraft
CutLoss, Inc
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