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Monday, October 24, 2011

November QQQ Bear Call Credit Spread

Market still getting insane on its way up. Very low volume though. Just sold the Nov 61 Call and Bought the Nov 63 Call on the QQQs. Everything for a 0.33 credit. 12 contracts per leg, maximum risk $2040. Potential reward $396. QQQ would need to go up to 61.33 in order for the position to start losing money at expiration.

Sell 12 QQQ Nov 61 Call @0.41
Buy 12 QQQ Nov 63 Call @0.08

As a result a 0.33 credit was obtained per vertical, meaning a total of 0.33 * 12 * 100 = $396 dollars of credit. The maximum loss in this play is $2004 if the market skyrockets before November 19 and QQQ is up beyond 61.33.

Probability of success: 73.76%.
Days to expiration: 25
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