The LEAPS Option Trader
105 W. Monument Street
Baltimore, MD 21201
Wednesday, November 17, 2004
Email – #212
** Update: Nokia Is On the Move
We took on a spread position in Nokia some time ago. We owned the Nokia $22.50, January 2006 call options (WIK AX).
When we became profitable in the position, we sold a call against our calls. That call was the Nokia $30 January 2006 call option (WIK AF). By doing so, we reduced our cost to just over $1.
Subsequently, Nokia’s price crashed and so did the price of our options. The good news is that Nokia is recovering and our $22.50 options are back up over $0.50.
The $30 option is at $0.05 by $0.10. You may be wondering if this is a good time to cover our $30 call since it is so cheap. The answer is no. The chance of Nokia going to $30 in the next 14 months is quite low. And, if it did, our $22.50 call would be worth more than $7.50 – more than enough to cover the cost of our $30 call.
So, sit tight. The $22.50 call is moving up in price much more rapidly than the $30 call… that’s the way it should be.
Regards,
Karim Rahemtulla
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.
Copyright – 2004 Mount Vernon Publishing. Mount Vernon Publishing does not act as an investment advisor or advocate the purchase or sale of any security or investment. Mount Vernon Publishing expressly forbids its writers from having a financial interest in any security recommended to its readers. All of our employees and agents must wait 24 hours after an Internet publication prior to following an initial recommendation. And for hard-copy-only publications, 72 hours after the publication is mailed. Investments recommended in this letter should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company. Mount Vernon Publishing provides its members with unique opportunities to build and protect wealth, globally, under all market conditions. The executive staff, research department and editors who contribute to recommendations are proud of the reputation Mount Vernon Publishing has built since its inception in 1984. We believe the advice presented to its members in our published resources and at our meetings and seminars is the best and most useful available to global investors today. The recommendations and analysis presented to members is for the exclusive use of members. Copying or disseminating any information published by Mount Vernon Publishing, electronic or otherwise is strictly prohibited. Members should be aware that investment markets have inherent risks and there can be no guarantee of future profits. Likewise, past performance does not assure future results. Recommendations are subject to change at any time.
