Blackstone Group LP (BX) is an excellent choice for either a diagonal spread or a covered call expiring in Jun. '15 at the $35.00 level according to MarketIntelligenceCenter.com’s patented algorithms.
A covered call on Blackstone Group for a net debit of about $33.99 would return 12.99% in 147 days if the stock expires above $35.00.
MarketIntelligenceCenter.com’s algorithms selected the Jan. '16 $27.00 call for the long position in a diagonal spread. This lowers the net debit to $7.08 but raises the assigned return rate to 12.99%.
"Diagonal spreads usually require less capital than covered calls,” said MarketIntelligenceCenter.com Managing Editor Bobby Raines. “That generally makes the return higher, but diagonal spreads are riskier than covered calls."
In the case of Jun. '15 trades on Blackstone Group, the covered call has a breakeven of $33.99, while in the case of the diagonal spread the breakeven point is at $34.08.
Blackstone Group traded between $34.75 and $35.99 before closing at $35.71 on Thursday. Technical indicators for the stock are bullish and Standard & Poor’s has a 12-month target price of $40.00.