Speculative Trade UPDATE - Websense (WBSN)

As we noted in the "Today's Morning Coffee" issue of the day after taking our position in the strangle options strategy, we closed out the long end of the strangle on the day after taking it. We realized a 144% return from the long end only of the strangle, after commissions but before taxes. The options traded as much as 300% above cost, but we exited early out of caution.

The total return will eventually be impacted by the sale of the short end of the transaction. As you recall, we were biased long, and only used the short end to protect ourselves. Currently, the short position is near worthless, but with markets under pressure, we have some hope of getting some of that capital back still. If the Put position remains worthless, our net return on the two-day trade would be an 86% gain after commission. Taxes will eat into that, but you don't pay taxes unless you make money! Thank you for your interest. (disclosure)