Market Beating Options: Option Play On Ezcorp

We now have three spread positions in play on Natural Gas, Base Metals, and the Volatility Index. Unfortunately we have lost ground on all three long positions as the market downtrend wreaks havoc! Volatility has increased and concerns over economic growth, particularly fears over China, have depressed Natural Gas prices and prospects for the Metals industry. Last week, we think the market overreacted and became oversold. We expect all three spread positions to recover and become profitable. Our Natural Gas position expires in January 2011 and our Base Metals position in July of this year so there is plenty of time for corrections to take place. We also expect volatility to subside and our VIX position will make money if that happens prior to February expiration. The other long call positions we hold on Del Monte, Par Pharmaceutical, Paragon, and Healthspring also lost ground with the market sell off last week. Our Bank of American option rose slightly and we remain v ery optimistic that this position will make significant returns prior to expiration in January 2011. We also added a stock, Ezcorp to our stock buy list. This particular stock also has options available for trade. After reviewing Ezcorp options, we think there is an excellent trading opportunity in their September 2010 options. Specifically, we are looking to buy the September call with an exercise price of $17.50 and at the same time sell the September $17.50 put option. This is a very bullish strategy as the call will allow us to leverage gains in stock appreciation, while the sale of the put helps us offset our entry cost on the call. We expect to to pay a net debit of 75 cents (put sell minus call cost) to get in on this position, but the call is already in the money nearly 65 cents. In short, for almost no cost, we get to carry a call option on a stock that has significant price appreciation potential through September of this year. However, while the cost is pr actically free, there is risk that the stock price could fall to the point where we could lose money on the put we sold. Our strategy will be to quickly close the put position to limit loss if the stock price moves in the wrong direction. We plan to try to get into the Ezcorp position when the market opens on Monday!

Portfolio Details Available Online At: http://www.marketbeatingstocks.com