Call Options on DFS on 9/7/2012

Seems cardholders aren't the only ones getting paid to discover. Discover Financial Services is best known for issuing Discover-brand credit cards, which are used by more than 25 million members. The company's cards, which include several levels of business and consumer accounts, repay cardholders a percentage of the purchase price each time they use their cards. Discover also licenses Diners Club credit cards, which are accepted in more than 185 countries. But there's more to this business than just plastic. The company also offers direct banking services, issues student and personal loans, and runs the PULSE Network ATM system.

Stockwinners.com is bullish on this name for the following reason: 

1. After looking at today’s Job report and yesterday’s action by Draghi at Europe, we believe that fed is going to do another round of quantitative easing before the election. This means that Fed has to keep interest rate lower for a longer period of time and print more money. The main sector that is going to benefit from this is going to be Financials. 

Trade: Buy 1 Oct 40 Call for less than .60 

Breakeven & Profit/Loss analysis 

• Breakeven at $40.60 by Oct expiration 
• Profit Above $40.60, Max profit is unlimited 
• lose up to $.60 between $40.60 and $40, max loss .60 below $40

The payoff table is presented below: 

Trade Buy 1 October $40.00 Call at $0.60 For a net debit of $0.60 Profit/Loss Analysis Breakeven at $40.60 Maximum profit is unbounded Maximum loss is ($60.00) at strike of $40.00 Closing Summary Sold 1 October $40.00 Call at $0.95

Position closed on 10/4/2012 at price of $0.95 with a 58.33% gain in 27 days.

Updates

10/4/2012 10:15:16 AM

Stockwinners is happy with the gains and is closing this position. if you decide to stay long, please adjust your stop loss and lock in some profits .

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