Call Spread on HPQ on 8/16/2012

HP wants to be "it" when it comes to IT. Hewlett-Packard provides one of the tech world's most comprehensive portfolios of hardware, software, and services. Products include PCs, servers, storage devices, printers, and networking equipment. Its services unit provides IT and business process outsourcing, application development and management, consulting, systems integration, and other technology services.

HP's software products include enterprise IT management, data management, business intelligence, and carrier communications applications. The company markets to consumers, businesses, governments, and schools worldwide. About two-thirds of sales come from outside the US.

Stockwinners is bullish on this name for the following reasons:

1. Shares have formed a bullish falling wedge and are supposed to break out of this formation
2. Shares have dropped more than 25% since May 2012 and are going to retract to the next resistance at $22 due to mean reversion 
3. Similar to 2010, 2011 patterns, back to school events have proven to boost HP's stock

Trade: Buy 1 Sept 19/21 Call spread for less than $ .80 as following:

• Buy 1 Sept 19 Call For $1.00
• Sell 1 Sept 21 Call For  $.23

Break Even and Profit/Loss analysis 

• Break even at $19.80 
• Profit between $19.80 to $21 up to $1.20 , maximum gain $1.20 above $21 on September expiration
• Losses between $19.80 to$19 up to $.80, maximum loss $.80 below $19 on September expiration

The pay-off table is presented below:

Trade Buy 1 September $19.00 Call at $1.00 Buy 1 September $21.00 Call at $0.23 For a net debit of $1.23 Profit/Loss Analysis Breakeven at $20.23 Maximum profit is unbounded Maximum loss is ($123.00) at strike of $19.00 Closing Summary Sold 1 September $19.00 Call at $0.00 Sold 1 September $21.00 Call at $0.00

Position closed on 9/22/2012 at price of $0.00 with a -100.00% loss in 37 days.

Updates

9/21/2012 8:00:00 PM

This position expired on Friday 21st of September 2012.

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