Rolled on 12/13/07
Since it's a week away from expiration, I am rolling to the next month by buying back my Dec 65 and selling Jan 60 call. The stock is still maintaining a bullish to neutral trend overall and it appears that it tested the 50 day moving average (green on chart). I am still keeping the Feb 50 as it is deep ITM. Rolling a week prior to expiration allows you to capture the most extrinsic value when selling options. It is deceiving to think that waiting to the last day gives you the most fluff to sell, but market makers know this so they start squeezing it out well before the last day. Also, I don't get exposed to the risk of getting called out on exp. day.
My original cost basis was $12.40
I bought back the Dec 65 for $0.12 and sold the Jan 60 for $3.07
New credit= $2.95
New adjusted cost basis= $12.40- $2.95= $9.45
Max Profit:
If not called out: 2.95/12.40 (orig. cost basis) = 23.8% ROI
If called out: (10 (diff. between strikes)-9.45 (adj. cost basis))/9.45= 5.8% ROI
Max Loss:
New stop loss set to $7.20 per share on 12/13/07 (20% of adj. cost basis)
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