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Monday, December 12, 2011

January QQQ Bull Put Spread

Demo-trading:
SELL 12 QQQ January 52 Put (@0.75)
BUY 12 QQQ January 50 Put (@0.46)

Credit: $0.29 (0.29 * 100 * 12 = $348)
Margin: $1.71 (1.71 * 100 * 12 = $2052)
Break-even point(s): 51.72 (Currently at 56.07, markets would have to fall by roughly 7.8%)
Probability of success: 79.70%
Days to expiration: 40
Max return on margin: 16.96%
Commissions: $36.00 (Assuming Interactive Brokers' schema for Canadians)

(Click on Image to enlarge)
 
The previous support of the QQQ was formed on November 25 in the neighborhood of 52.80 - 53.00 so the break even point of this position is bellow that.

This trade forms an Iron Condor with the currently open QQQ Bear Call Spread, so the margin requirements in the portfolio don't increase. Bellow is the current profit picture of the two QQQ credit spreads combined.

(Click on Image to enlarge)

Reflecting a maximum return of $708 vs a Maximum Risk of $1692. And about 2 out of 3 chances for the whole position to be successful.

Check out demo-record


Related articles:
Weekend Thoughts (December 17, 2011)
January QQQ Bull Put Spread closed (December 22, 2011)


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