This trade was posted January 27, 2009.

Diagonal Spread Example:

Sell GGBBU            Feb 2009    7.5 Call            $0.35

Buy KDMAZ            Jan 2010   2.5 Call             $4.40


Net Cost                      $4.05(+Trading Costs)


Maximum Loss            $4.05(+Trading Costs)


GGB is trading for        $6.54 at the close on Tuesday 01/27/09


GGB is now trading for $4.85 on Tuesday 03/17/09.



Sell GGBDA          April 2009     $5 Call          $0.40


The KDMAZ (Jan 2010 2.5 Call) is now trading for $2.65.


Net Cost                       $3.65(+Trading Costs)


Maximum Loss is now   $3.65(+Trading Costs)


If this option is exercised we will have a loss of $1.15 (+ Trading Costs) on this Trade Idea, if this option expires we will look at the next trade.  For this trade, we have had the worst scenario for a Diagonal Spread, which is the underlying stock (GBB) has declined dramatically (almost 26%).  If GGB stays below, but near, $5 we should be able to salvage this trade, provided it’s fall does not continue.

————————————————————————————————————————————————————————————  GGB is now trading for $5.06 on Friday 03/20/09


Buy the GGBDA         April 2009        $5 Call                 $0.10


Maximum Loss is now     $3.75 (+Trading Costs)

We will wait for another trade.