The 5 month trade on DVMT was successful. Michael Dell announced a new plan to IPO Dell again, and the buyout price of DVMT was targeted to be $109. That pushed DVMT, the tracking stock for Dell’s holding in VMware, to close at $94.32, past the $90 strike of the option I shorted. Not to get too greedy, but we are still expecting DVMT to be taken over at $109 (or higher?) I entered into another spread.
Again, the process for a call spread is to buy one strike, sell a higher strike, which lowers the cost, but constrains the potential gain. You can see, even with the wide bid/ask pricing, I pulled up the chart after my trade went through, my cost was $2.16. I need DVMT to rise to $102.16, just over 9%, to break even, and at $109, a 17% increase, I’d see a 300% gain. No guarantees, the deal can fall through just as easily as it can close by the end of January. As I’ve stated, I prefer longer term trades, to me, 18-24 months is ideal. We’ll see how this one does.