We are “rolling down” the strike price on the short side of our calendar spread for BIDU. We originally bought the Jan 110 Calls for 27.20 on August 24th, then we sold the October 125 Calls for 3.20 on August 29th. This lowered the cost basis of the leaps to 24. Rolling down the short side of the spread will allow us to collect another credit that will bring the cost basis of the leaps down to 21.80. Keep in mind that the stock has dropped more than $10 since we bought the leaps, yet the credits we are taking in allows us to keep this spread profitable.
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