ThePanelist.com - A Visit to the Intel Options Cocktail from March

A Visit to the Intel Options Cocktail from March

Written by David Neubert

Monday, 09 July 2007

Based on a reader comment from Alex, I decided to update my Intel cocktail from March.

"Question: INTC stands today at 24.68. Are you still in these positions, as declared on 3/21/07? The stock is up 30% from your 17.41 "cocktail cost"...what're the results of your investment, now that the underlying security has surpassed the 22.50 calls? "

Here's the mark to market:

Stock: $24.93 - $18.99 = $5.94 profit
$12.50 puts: $0.02 - $0.13 = $0.11 loss ($0.22 for 2x)
$17.50 puts: $0.14 - $0.95 = $0.81 profit
$22.50 calls:$3.65 - $0.80 = $2.85 loss
Dividends collected $0.1125

$5.94 - 0.22 + 0.81 - 2.85 + 0.1125 = $3.79
Had I just bought the stock, I'd have a higher profit ($5.94) but a bigger downside. I'm sticking with this position for now. I'll stick with it to get to my max profit profile. Though I never see anything wrong with exiting a position early, as the downside becomes much larger than the upside (this is often the case with deep in the money options positions).

Disclosure: I am still in the options position described. I also have a little bit of an overage in terms of stock position on which I outright long. I recently sold a small about of INTC (not part of this position).

Site disclaimer.