Option Investor

New Portfolio Position - Orckit Comm. (NASDAQ:ORCT) Projected Gain = $200

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ORCT - Orckit Communications $27.02

Orckit Communications (NASDAQ:ORCT) and its subsidiaries engage in the design, development, manufacture, and marketing of telecom equipment that enables transmission of broadband services. The company's product lines offer capabilities of bandwidth allocations, simultaneous support for voice and data transmission, compatibility, and an element management system, as well as addressing the need for telecommunication transport solutions capable of supporting high bandwidth data and voice services in metro networks. Orckit also develops telecom products technologies targeting packetized services offered in metro and access networks.

This week's search for bullish positions yielded a number of good stocks however their option premiums were less than favorable. ORCT was one of the few issues that offered a solid uptrend with enough (intraday) volatility to provide a viable "premium-selling" opportunity. Although there is no Open Interest in the recommended (JUL-$22.50) series, the BID/ASK spread is relatively large and traders may be able to "target-shoot" an acceptable credit in this conservative position. The minimum entry price should be no less than $0.35 per contract however if this amount can not be achieved in the next few sessions, we will post another candidate for the OW Portfolio.

Fundamentals Chart Earnings Dates Analyst Ratings

Suggested (Bullish) Option Position:

Sell Put JUL 22.50 QEO-SX

Target Price = $0.40 Open Interest = 0
Potential Profit (5 contracts @ $0.40) = $200
Initial Margin (5 contracts) = $4,484
Return on Investment (max) = 5.5%
Cost Basis in Stock = $22.10
Days to Expiration = 33

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