Call Spread on UTHR on 8/8/2012

United Therapeutics (UTHR) hopes its products will be in vein. Its injectable drug Remodulin treats pulmonary hypertension, which affects the blood vessels between the heart and lungs. The product is marketed directly and through distributors in North America, Europe, and other regions. Other hypertension treatments include Adcirca and Tyvaso. The company's development pipeline includes additional treatments for cardiovascular disease, as well as various cancers, respiratory conditions, and infectious diseases. United Therapeutics has divested its cardiac monitoring division.

Stockwinners is bullish on this name for the following reason:

1. This stock will be named by the leading stock advisory service as one of its "top picks."
2. Shares have formed a bullish "Cup and Handle" and are ready to break to the upside.

TRADE: Buy 1 AUG 55/57.50 CALL FOR LESS THAN $1.00

• BUY 1 AUG 55 CALL FOR  $1.50
• SELL 1 AUG 57.50 CALL FOR $.50

Breakeven & profit/loss analysis

• Breakeven is at $56.00 which is 1% above where the stock is currently trading at
• Profit btwn $56.00 to $57.50 , make up to $1.50, max profit $1.50 above $57.50
• Losses btwn $56.0 to $55 , loss up to $1, max loss $1 Below  $55 by August options expiration

The payoff table is presented below:

Trade Buy 1 January $50.00 Call at $1.50 Sell 1 January $50.00 Call at $0.50 For a net debit of $1.00 Profit/Loss Analysis Maximum profit is ($100.00) at strike of $50.00 Maximum loss is ($100.00) at strike of $50.00 Closing Summary Sold 1 January $50.00 Call at $1.30 Bought 1 January $50.00 Call at $0.00

Position closed on 8/17/2012 at price of $1.30 with a 30.00% gain in 8 days.

Back to Portfolio