Put Spread on DRI on 12/26/2012

Darden Restaurants (DRI) owns and operates full service restaurants in the United States and Canada.

It operates restaurants under the Red Lobster, Olive Garden, LongHorn Steakhouse, The Capital Grille, Bahama Breeze, Seasons 52, Eddie V's Prime Seafood, and Wildfish Seafood Grille brand name.

Shares have formed a bearish "flag" following its poor sales report. Same store sales data came worse than expected.

52-Week Trading Range: $43.80 - $57.93

Last Trade:  $44.41

Here is the Option Trade:

Buy One January $45 Put Option  $1.70

Sell One January $42 Put Options  $0.50

Net Investment: $1.20

Breakeven at $43.30 at expiration date.

Maximum Loss: $1.20 if stock closes above $45 by expiration 

Maximum Profit: $3.00 if stock closes at $42 at expiration date.

Trade Buy 1 January $45.00 Put at $1.70 Sell 1 January $42.00 Put at $0.50 For a net debit of $1.20 Profit/Loss Analysis Breakeven at $43.80 Maximum profit is $180.00 at strike of $42.00 Maximum loss is ($120.00) at strike of $45.00 Closing Summary Sold 1 January $45.00 Put at $0.05 Bought 1 January $42.00 Put at $0.00

Position closed on 1/18/2013 at price of $0.05 with a -95.83% loss in 22 days.

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