[Creating Spread Against Blackstone Group (BX) LEAPS]
Dear Member:
As you know, I own the Jan 2010 25 LEAPS calls (KJLAE) on the Blackstone Group (BX). While I still like the play, the stock is down a bit so I am going to take the opportunity to place an order to sell to open the Mar 17.50 calls (BXCW)at a limit of 40 cents. If filled, that will create what is known as a diagonalized calendar spread. If the stock stays below $17.50 for the next 29 days (Mar expiration) I will be able to keep the 40 cents and will have brought in income while also reducing the overall risk in the underlying LEAPS position by 20%.
DISCLOSURE: At the time of publication, I own the referenced LEAPS calls on BX.
Sincerely,
Bill Kraft
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