The LEAPS Option Trader
105 W. Monument Street
Baltimore, MD 21201
Friday, July 23, 2004
Email – #182
** Getting Defensive With Ciena
Reduce your Ciena (Nasdaq: CIEN) cost by $0.15 to $0.20 today by selling the Ciena January 2005 $5 call option (EUQ-AA) against your Ciena $5 January 2007 call option.
The January 2005 $5 options are paying $0.20 right now. By selling this option you limit your upside to $5, if Ciena closes at $5 or higher by this coming January. If Ciena closes at $5 or above, we will still make boatloads of money on our 2007 calls because of the remaining time premium. If not, we will pocket the 20 cents and reduce our cost.
The current market does not look good right now – that is why we have a short on the QQQs. I doubt Ciena will be at $5 this year or in January, which is why we have a 2 1/2 year option.
Regards,
Karim Rahemtulla
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Bio:
Karim Rahemtulla is the former Investment Director of The Oxford Club. The editor of The Smart Options E-Report, The Income Trader – A Covered Call Strategy and The LEAPS Option Trader, Karim is also a regular contributor to The Oxford Club Communiqué. His highly successful trading systems use covered calls and LEAPS to boost returns on blue chip stocks, and during the bear markets of 2000 and 2001, his picks outperformed the major market averages. Educated in England, Canada and the U.S. and fluent in several languages, Karim travels the world to find the best investment opportunities for our members.
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