Digital River (NASDAQ:DRIV) is a provider of comprehensive electronic-commerce outsourcing solutions. The company products enables clients to access its proprietary electronic-commerce system over the Internet. Digital River's technology platform is the basis for a suite of electronic-commerce services, including Web commerce development and hosting, transaction processing, fraud screening, digital delivery, integration to physical fulfillment and customer service. Digital River also provides analytical marketing and merchandising services to assist clients in increasing Web page view traffic to, and sales through, their Web commerce systems.
With this month's short (4 weeks) expiration cycle and the dearth of "premium" in options, it has been very difficult to find conservative spreads for our model portfolio. However, the recent volatility in this issue has produced some robust (OTM) option prices and although the position is a bit too aggressive for the MCM's risk/reward outlook, it is certainly a viable play for some of the more experienced traders in our ranks. This spread will not be included in the portfolio summary.
PLAY (less conservative - bearish/credit spread):
BUY CALL MAR-40.00 DQI-CH OI=1734 ASK=$0.25
SELL CALL MAR-35.00 DQI-CG OI=3526 BID=$0.70
INITIAL "NET-CREDIT" TARGET = $0.50-$0.60
POTENTIAL PROFIT (X 5 contracts) = $250
RETURN ON INVESTMENT (max) = 11%
COST BASIS = $35.50
LOSS-LIMIT/EXIT POINT = $34.25 (cons) - $35.25 (aggr)