G23ROCKS

Options Trader: Wednesday Outlook

Phil, on May 28, you recommended buying BAC leaps at $4.70.

"This is good timing for Bank of America (BAC) [another one of our LTP holdings], who are exercising $1.9Bn worth of calls to up their stake in China Construction Bank (CICHF.PK) to 10.75% from 8.2% in China’s second largest bank. BAC’s original $3Bn investment in June 2005 is now worth about $30Bn. The 2010 $35 calls are just $4.70 and make a fantastic long-term investment."

Those calls are selling for $1.20 today (a 75% loss in a little over a month). I'm curious how you would handle such value erosion in long term calls that you've bought, e.g. sell, hold, average down, if your reason for buying has not changed. Thanks. I enjoy reading your posts.