Another 3D Printing Trade

Our two previous trades on 3D Systems (DDD) were successful at 100% and 88% returns, and they were both short put strategies.  The stock has taken off and we are looking to capture upside over the next 6 months with a vertical call spread option strategy.  We are executing the following three option trades:

1. Long Feb 2014 $55 Strike Call for a cost of $6.70

2. Short Feb 2014 $65 Strike Call for a credit of $3.20

3. Short Feb 2014 $46 Strike Put for a credit of 3.70

The net CREDIT on this trade is .20 cents, so you're getting paid for upside exposure to DDD, but the risk is that if it drops below $42.30 you will have to buy the shares.  There is a 28% probability that DDD will trade below $46 in January 2014, so for now the volatility suggests that we have good protection with the out of the money short puts to use as income to offset the calls that we're buying.  

There is still  tremendous upside in 3D prining, and Barron's just put a $62 price target on the stock.  

http://online.barrons.com/article/SB50001424052748703320204579081581375818504.html

Current 1 year chart of DDD:

The options that we executed are highlighed in the chart below: