On Monday I began to open new CC positions with the proceeds from the sale of BMY and MCHP. This position is one of the more risky positions in the CCIP for the fact that GME will announce earnings in a few days, which is part of the reason for the high option premium. I feel that this risk is warranted however for a few reasons. The first is mainly a technical reason, in that the stock has recently found support around the $24 level, and was also quite a bit oversold recently. Another reason, is that the stock has been "talkd down" by a number of talking heads including Jim Cramer. Many people have cited weakening hardware sales as well as poor new game releases this year. I believe on the other hand, the Gamestop benefits from the weakened economy in its used game sales, which it makes good margins on, as well as the recent release of Call of Duty which broke sales records. For all these reasons I believe Gamestop to be a good holding for the CCIP. The new profit/loss info is below:
11/16/2009 -- Bought 100 GME @ 24.35
11/16/2009 -- Sold To Open 1 GME December $24 Call @ 1.42
The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $2293.00
Commissions (Included In Cost): $5
Downside Coverage (from current price of $24.35): 5.8%
Possible Max Upside: 4.25%
Annualized Max Upside: 47.01%
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