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Thursday, September 13, 2012

September RUT Bear Call Spread closed

Demo-Trading:
BUY TO CLOSE 6 September RUT 860 CALL @8.00
SELL TO CLOSE 6 September RUT 865 CALL @5.50

Debit: 2.50 

The initial trade had been entered for a CREDIT OF 0.65. Closing the spread for 2.50 debit results in a loss of 1.85. In 6 contracts per leg = 6 * 1.85 * 100 = $1110. See order execution below.

(Click on image to enlarge)

This happened a few minutes after the QE3 announcement by the Federal Reserve.

(Click on image to enlarge)

I'm not rolling over to October as the premiums don't justify the added risk. The 900/905 Credit Call spread was priced at 0.65 at the time of this writing. Only about 4% away, in more than a month to expiration for that credit is not good enough.

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