Trade of the Day – Bearish This Week on AA

Trade of the Day: Selling the AA July 13th weekly 8 strike, buying the 9 strike Call Vertical Spread for $.57

Profitable: I make money on this trade if AA closes under $8.57 on July 13 , 2012.

Break-even: I break-even on this trade if AA closes at $8.57 on July 13, 2012.

Unprofitable: I lose money on this trade if AA closes above $8.57 or July 13, 2012. The most I can lose on this trade is the amount I sold the Spread for $.57. Commissions not included. Margin is $43 each spread.

Risk: $43 per each spread

Reward: $57 per each spread

Chart: Bearish overall , but looking for a good risk vs reward that it tests back lower

Notes: I am playing this as an even money bet that AA will sell-off next week on earnings.

UPDATE 7.9.2012 This Spread is worth $.60, but I am leaving this trade on until earnings today after the bell.


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Andrew Keene