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Wednesday, September 12, 2012

October SPY Credit Call Spread

Demo-trading:
SELL 17 SPY October 149 Call (@0.48)
BUY 17 SPY October 151 Call (@0.22)

Credit: $0.26 (0.26 * 100 * 17 = $442)
Margin: $1.74 (1.74 * 100 * 17 = $2958)

Break-even point(s): 149.26 (Currently at 144.29)
Probability of success: 76.25%
Days to expiration: 37
Max return on margin: 14.94%
Commissions: $51.00 (Assuming a very unfavorable $1.50 per contract)

Order execution:
(Click on image to enlarge)

Profit picture:
(Click on Image to enlarge)

SPY needs to keep the uptrend until October expiration and hit 149.26 to cause a loser. Markets still up, non stop, but with some signs of overbought. McClellan oscillator at 105 still leaving room to the upside. Stochastics overbought. 74.63% of stocks above their 20 SMA and 72.33% above their 50 SMA. I will probably have to endure some pain with this position as there is still a little upside room, but that psychological pain is the price for entering and avoid losing the opportunity.

(Click on image to enlarge)


Moving forward I will try to sell a Put Credit spread probably in the 136/134 area as soon as there is a 2% - 3% pull back from current price.



Check out Demo-Record 

Related Articles:
Weekend Portfolio Analysis (09-15-2012)
Weekend Portfolio Analysis (09-22-2012)
October SPY Bear call spread closed 


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