timwest

YHOO _ Buy-Write

YHOO   None
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5
Yahoo is in a new uptrend and with the company in the headlines for potential acquisition, the call options are carrying a higher level of interest which is pushing up the price. I believe it is a good time to sell those calls against holding shares of YHOO, which I feel are at a reasonably low valuation overall. I feel that a 6% return in the course of 2 weeks time until the options expire, is a decent return. I feel that the shares would return to $14 without the recent news, so that means the trade could break even. However, that's a trade I'm willing to take.
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This trade worked out very nicely and without any hiccups along the way because $15.18 was the low going forward from the time of publication. TO SUMMARIZE: $1 return ($1.18 for the option, less $0.18 loss on the stock) with $14 net cash invested ($15.18 for the stock, less $1.18 for the call option), less commissions, is a 7% return in two weeks.
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good commentary..
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