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November 21, 2009
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CBRL Group Inc. (CBRL) Profits
January 14, 2009Dear Fellow Options Traders,
On Dec. 10, we recommended you buy the Cracker Barrel Old Country Store (CBRL) March 20 Puts (CBQOD) for $3.50 or better.
Today, we recommend selling half of your position at $4.80 or more and lock in a 40% gain.
We put on the trade with the stock at $21 and volatility around 90. Today, the stock is $16.16 and volatility is still around 90. The bid/ask spread on the puts is $4.80 by $5. This is a good example of the power of theta (or time decay), which is working against us.
In this market, we think it is prudent to clip gains when you have the opportunity. We will closely watch the other half of the position that's open.
Have a great day trading.
Nick Atkeson and Andrew Houghton
