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Thursday, January 20, 2011

Hewlett Packard

I really like Hewlett Packard. It's one of the worlds largest consumer electronics company and makes some great products. Currently, its selling for 46.13 and has some pretty good option premium. The 1 yr taget price is 54.74 and the stock has a fwd P/E ratio of 8.13. They are also releasing some new tablets and smartphones this year based on their new operating system purchased from Palm. I'd maybe wait for it to pull back a little, but heres how you can enter it today.

Buy 100 HPQ @ 46.13:             ($4,613)
Sell 1 Jan HPQ 50 Call @ 310:    $310
Sell 1 Jan HPQ 45 put @ 435:     $425
Total cash outlay:                         3,878

Break-even: $41.89

Return if >$50 on Jan 12: 1,122+div/3,878 = ~29% on a stock that needs to go up by 8.3% over 11.5 mos


Ben said...

Trade was initiated in my virtual portfolio

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