Breakdown: I bought the CREE November 32.50-35 Call Spread for $0.43 Total.
Profitable – I make money on this trade if CREE above $32.93 by November 18, 2011.
Break-even – I breakeven on this trade if CREE closes at $32.93 by November 18, 2011.
Unprofitable – If CREE closes under $32.93 I can lose the maximum of the amount I paid for the spread, $.43.
The reason I like this trade: This is a very low probability trade, but represents great reward if it is a winner. CREE is surging today on news that China will institute a 3 step plan to eliminate incandescent light bulbs to conserve energy. This is good news for CREE who develops LED lighting products. There is huge unusual activity on the November 30 and 35 Calls, a buyer of 35k of each. I was going to buy the November 30 Calls, but they were too pricey. In this trade, I am only risking $.43 and the spread can be worth $2.50, which is almost a 6-1 payout. This is another “no brainer” trade with a great risk vs reward. Questions about this trade can be directed to me at Andrew@KeeneOnTheMarket.com.
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Tags: Andrew Keene, Cree (CREE), Options, Trade Of The Day
Michael Kudrna
