[Selling LEAPS Calls to Create Spread on Sirius Satellite (SIRI)/Selling to Open Jan '08 5 Calls (YFWAA)/Day Order/Limit $0.75]
Dear Member:
Sirius Satellite (SIRI) has stalled around $4.00 and I own the Jan '08 $2.50 calls (YFWAZ). I am placing an order to create a spread by selling to open the Jan '08 $5 calls (YFWAA) at a limit of $0.75 for the day. If filled, that will bring in some income and further reduce my risk in the underlying position by 75 cents a share (less a very small commission). If the stock should really jump, the worst thing that would happen would be that I have a profit locked in. If it drifts sideways or down, I'll be able to buy back my $5 calls for less than I sold them and thereby enjoy a profit on that leg.
DISCLOSURE: At the time of publication, I own Jan '08 2.50 LEAPS calls on SIRI.
Sincerely,
Bill Kraft
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