Last weekend I headed out to my neighborhood mall and noticed the huge crowd waiting for seating at the

Cheesecake Factory

(CAKE) - Get Report

that opened last year. As a customer it's annoying when you can't get a table right away but as a shareholder -- it's thrilling. I ended up getting food to go and came home vowing to pay for all my meals there with a few well-chosen options trades.

CAKE is debt free, has shown excellent long-term results and is on track for an all-time record year in 2011. Before the 2008-09 recession this was a high multiple growth stock with P/E's averaging 25x-35x. 2008's EPS dipped from $1.04 to $0.82 and the shares got crushed as many feared we were headed for the next great depression.

2009 saw a partial rebound to $0.97 and last year saw earnings surge 46% to a new high of $1.42 share. Consensus views now run $1.65 and $1.86 for 2011 and 2012. All the good news sent CAKE up to $34 before recent market weakness brought it back to yesterday's close of $29.

How can you play a high-quality issue that's moderately valued but not absolutely cheap? An unbalanced buy/write does the trick for me.

By selling in-the-money calls and in-the-money puts you bring in a high absolute amount of cash. This reduces your cash outlay and leverages your gains on even a small rise in the share price between now and next January.

Any move up of 3.5%, or better, to close above $30 on January 21, 2012 will see:

¿ The $25 calls will be exercised and the $30 puts will expire worthless

¿ You'll end up with no shares and $25,000 in cash

This best-case result is a gain of $25,000 - $18,700 = $6,300 achieved in exactly 10 months. $6,300/$18,700 = 33.6% cash-on-cash if you do this in a margin-type account and write the puts against paid-up equity already on deposit.

If CAKE merely remains unchanged through January 21, 2012:

¿ The $25 calls and the $30 puts will both be exercised

¿ You'll need to lay out another $5,000 of net cash

¿ You'll end up with the same 1000 shares you started with

Your liquidation profit would be $29,000 - $23,700 = $5,300. Not bad for shares that went absolutely nowhere.

$5,300/$23,700 = 22.3% for your 10-month holding period

If CAKE closes below $25 on January 21, 2012:

¿ The calls will expire and the puts will be exercised

¿ You'll need to lay out another $30,000 in cash

¿ Your final position will be 2000 shares of CAKE

Breakeven on the whole trade is $24.20 per share. You could absorb a drop of $4.80 per share, or 16.5%, without taking a loss.

Trades: Buy 1,000 CAKE for $29.00 per share, sell to open 10 CAKE January 2012 25 calls at $6.10 and sell to open 10 CAKE January 2012 30 puts at $4.20.

Dr. Price joined Merrill Lynch in 1987 and over the next 13 years worked with A.G. Edwards, Wheat First and Ferris, Baker Watts. Dr. Price enjoyed enough success to retire in October 2000, but he continues to write and give investment seminars.

At the time of publication, Paul Price was short CAKE puts.

On March 31, TheStreet's OptionsProfits is hosting a webinar featuring Andrew Giovinazzi of Aqumin. Using specific trading ideas, Andrew will discuss how to pick the right strategy for your risk tolerance and overall portfolio. We will address how to formulate the proper trade, manage the position and make adjustments and exit strategies.

OptionsProfits For actionable options trade ideas from a team of experts, visit TheStreet's OptionsProfits now.

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