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BookingAlpha Option Trading Advisory

Tuesday, March 6, 2012

April IWM Bull Put Spread

SELL 14 IWM April 72 Put (@0.95)
BUY 14 IWM April 70 Put (@0.67)

Credit: $0.28 (0.28 * 100 * 14 = $392)
Margin: $2408

Order execution below:

(Click on image to enlarge)

Break-even point(s): 71.72
Probability of success: 83.42%
Days to expiration: 44
Max return on Investment: 16.28%
Commissions: $42.00 (Assuming Interactive Brokers' schema for Canadians)

(Click on Image to enlarge)
IWM would need to go from 79.18 down to 71.72. That's a 9.4% drop. Although the market has been trading lower in the last 2 days, I think chances are good that the situation hasn't drastically changed in the world. The current pullback was simply overdue and bound to happen at some point. I don;t think it is time to panic but time will tell, I have 44 days to baby sit this one.

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