Anatomy of a B2B Calendar Spread – EK

This is a very good trending Calendar Spread candidate. EK. Enjoy the analysis


I couldn’t have asked for or a better Back-to-Back Calendar Spread.
This is for Eastman Kodak. My eventual entry price was 19 cents on 44 contracts.
EK%20Cal%20Chart.gif
I bought the spread when the underlying was @ 23.78
I like this one a lot. I have 44 contracts right now.
Sell June 25p, buy July 25p for a net debit of .20. I bought 8 @ .20, 28 @ .19, 8@ .18. Right now the price is being supported at it’s 50 and 200 day moving averages.
On 44 contracts
Max Loss = $838 + commissions
Max Gain= 3331 – commissions
My plan is to sell by Expiration on June 15.
Sell half @ .50. To lock in gains. (@ $25 for the stock, this date is forcasted for this profit to be May 31st.) (Think or Swim charting is so cool) And let the rest ride to expiration week.
Also if the stock price drops below 22.4 I will consider exiting the position. But @ .20 for the spread, I am not going to worry about it too much (max risk is 838+ comm)
The options market is very liquid with a tight bid/ask spread.
Here are a few key dates which take place during this holding period:
Ex-Dividend Date May 30,07 (it should give an upward bias to the price.)
Trailing Annual Dividend Rate: .50/yr (12.5 cents per quarter)
The earnings announcement was 2 weeks ago. Should be no surprises here.
Beta:2.09
% Held by Institutions4:100.30%
50-Day Moving Average: 23.90
200-Day Moving Average: 23.78

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