NaughtyPines
Long

OPENING: EWZ JANUARY/JUNE 15/26 CALL DIAGONAL

AMEX:EWZ   ISHARES INC
... for an 8. 40 /contract debit.

Metrics:

Max Loss: $840/contract
Max Profit: $260/contract
Debit Paid/Spread Width Ratio: 76.4%
Break Even: 23. 40 vs. 23.30 spot

Notes: A neutral to bullish assumption, IRA-friendly play in the weakened EWZ . I naturally could have gone short put (the June 19th 19 shortie is paying .63), but wanted the opportunity to make something decent if it totally rips away. In a cash secured environment, you'll get some buying power relief over going with the naked.

From a delta standpoint, the back month is at the 89 delta; the front month at the 28, with the front paying just a smidge short of the extrinsic in the back month (which is why the break even is slightly above where EWZ is currently trading). The way to look at these is a form a synthetic covered call, with the back month 90 standing in for your stock.

Trade closed manually: Taking this off for 10.18 here, a 1.78 ($178)/contract winner. I have other EWZ on, which I didn't want to "step on" with this setup ... .

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