Call Options on CMCO on 7/29/2012

Columbus McKinnon (CMCO) designs, manufactures, and markets material handling products and services for various commercial and industrial end-user markets in the United States, Europe, Canada, and internationally. The company offers electric, lever, hand, and air-powered hoists; hoist trolleys; winches; industrial crane systems, such as bridge, gantry, and jib cranes; alloy and carbon steel closed-die forged attachments, including hooks, shackles, hitch pins, and master links; and closed-die forged attachments comprising hooks, shackles, textile slings, clamps, logging tools, and load binders. Shares last traded at $14.73.

We are Bullish on this name for the following reasons:

  1. The stock has formed "cup and handle "pattern.
  2. This stock is expected to be featured by a major stock avisory service as a value stock. There are many mutual funds that are mandated to buy these "value stocks." This stock has an average daily trading volume of 82K. The new demand for the shares will push shares out of its bullish "cup and handle."

TRADE: Buy 1 SEPT $12.5 Call


  • Buy 1 January $50.00 Call at $2.40
  • For a net debit of $2.40

Profit/Loss Analysis

  • Breakeven at $52.40
  • Maximum profit is unbounded
  • Maximum loss is ($240.00) at strike of $50.00

Closing Summary

  • Sold 1 January $50.00 Call at $2.95

Position closed on 8/21/2012 at price of $2.95 with a 22.92% gain in 22 days.

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