Current Spread Trade

It's midmorning on Thursday May 8th. I thought I'd detail my open positions on NOK.

NOK Vertical Spread:
Bought 5/2/08
Bought Call .75 strike 31
Sold Call .45 strike 32
Net Cost .30
Close Price 5/2 - 29.78

I've previously owned Nokia stock, thus I have been following it for some time. I'm not content to buy verticals on the bull side, especially during this period, as I think the market is irrationally bullish. However, this stock is a stud in my mind. It has not been below $28 since a big run up at the end of last summer. It got killed in March, and then again near the end of April after earnings.

Two main drivers pushed me to go bullish on Nokia. One, the euro has been finally losing steam against the dollar, which will only help Nokia in the States. The main concern during Nokia's conference call in April was the global slow down, mainly steaming from the weak dollar. The dollar is beginning to strengthen. Second, Nokia's music phone, which competes with the Iphone, is dominating internationally. 147 millions units were sold last year, way more than the Iphone is on pace to sell this year. This company is the mother of all cell phone companies.

In addition, I felt $30 was reasonable to risk on the trade.

43 days before expiration, and I see no reason for the price not to hit over $31 in the coming weeks. It's a strong company that has been beaten up with the rest of the market. Plus, Motorola is a terrible company in every regard, which can have its benefits as well.

NOK is at $29.64 today, slightly below the price where I bought the calls. AL