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Free Trade of the Week – VMware (VMW) – Reports after the markets close on Tuesday, 1/28/2013

VMware, Inc. (VMW) is scheduled to report earnings after the markets close on Tuesday, January 28, 2014.

Anytime a company pre-announces earnings ahead of schedule http://biz.yahoo.com/e/140123/vmw8-k.html, this is usually a great time to buy a Neutral Calendar Spread, especially when the Implied Volatility is still expecting a large price move (currently at 77 vs. February’s 36). As of now, there is a $7.00 price moved expected based on at-the money strike prices. I am expecting about half that, so this should be a quick double.

I will be placing a Neutral Calendar Spread. Here is how it is placed:

Entered Trade

Sell -10 VMW JanWk5 95 Call
Buy 10 VMW Feb14 95 Call


Cost/Proceeds $950.00
Option Requirement $0.00
Total Requirements $950.00
Estimated Commission $30.00

Greeks / NBBO

Symbol Bid Ask IV Delta Gamma Vega Theta
VMW JanWk5
95 Call 2.55 2.75 75.79 -518.49 -61.01 -34.35 435.15
VMW Feb14
95 Call 3.50 3.70 36.29 524.57 45.01 97.07 -74.66
Net 6.08 -16.00 62.72 360.49

NBBO 0.75 1.15. Try to pay 0.95 for this trade or less. At a maximum, pay 1.05.

VMW NCS 12814

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