I’m sometimes deemed too conservative. This week, how about a conservative but apparently risky position?
Virgin America (VA) has been rated the best airline in the U.S. three years running. The company is now in play, pushing the stock from $30 to $38 in a week or so.
This is a wonderful company with expanding profits, so there is, in the long run, a manageable level of risk—if they aren’t acquired in the immediate future.
If you buy VA shares at around $38 and change and sell the April 40 call, you pocket $1.20 in cash immediately. If you are called out, you net roughly $3.00 in less than a month.
That’s a very nice way to play the company and the stock.
Think about it…