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Wednesday, October 10, 2012

November SPY Bull Put Spread

As per my tweet today a  few minutes before market close.

SELL 15 SPY November 137 Put (@0.97)
BUY 15 SPY November 135 Put (@0.71)

Credit: $0.26 (0.26 * 100 * 15 = $390)
Margin: $1.74 (1.74 * 100 * 15 = $2610)

Break-even point(s): 137.74 (Currently 143.28 )
Probability of success: 78.13%
Days to expiration: 37
Max return on margin: 14.94%
Commissions: $45.00 (Assuming a very unfavorable $1.50 per contract)

With the retracement in the last few days, SPY is around horizontal support at 143, also near the lower end of the uptrend channel that started more than three months ago. McClellan at -151 and 34.23% of stocks above their 20 SMA. There could be some more downside but I believe SPY 137 is far enough, and I don't want to miss this opportunity. This is the first trade of the November expiration cycle.

(Click on image to enlarge)

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Related Articles:
Weekend Portfolio Analysis (10-13-2012)
Weekend Portfolio Analysis (10-21-2012)
Weekend Portfolio Analysis (10-28-2012)
Weekend Portfolio Analysis (11-04-2012)
November SPY 137/135 Credit Put spread closed

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