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Saturday, April 12, 2014

June 2014, RUT Credit Put Spread

Stimulated by the blood bath in RUT the last 9 days, I opened the first June position of the year. Normally I don't go that far in time (69 days to exp.) But in this case I didn't want to miss what seems to be a good opportunity and because I already have a May 1000/1010 RUT Credit Put spread, I wanted to diversify the exposure using a different month.

Here goes the trade:
Sell 2 RUT 930 June Put @5.60
Buy 2 RUT 920 June Put @5.00
Net Credit: 0.60 ($120 in 2 per leg)
Days to expiration: 69

Here's RUT for future reference, and the little yellow lines represent my current Credit Put spreads diversified over the prices spectrum and over different expiration cycles.
April 1055/1060
May 1000/1010
June 920/930
(Click on image to enlarge)
Oh boy, do I hate this kind of exposure!

Fortunately the April one is going away in 6 days. As of now I don't plan to hold the June 920/930 to expiration, but lock in a winner early as there's too much time to expiration.

Check out 2014 Track Record

Related Articles
Weekend Portfolio Analysis (April 12, 2014)
Weekend Portfolio Analysis (April 18, 2014) 
Weekend Portfolio Analysis (April 26, 2014)
Weekend Portfolio Analysis (May 3, 2014)
Weekend Portfolio Analysis (May 10, 2014)
Weekend Portfolio Analysis (May 25, 2014)
Weekend Portfolio Analysis (June 7, 2014) 
Weekend Portfolio Analysis (June 14, 2014)


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3 comments:

  1. Hi Henrik,

    Typo here:

    Sell 2 RUT 930 April Put @5.60
    Buy 2 RUT 920 April Put @5.00

    You mean June not April. That is a pretty good position as it is 16% away from current price.

    You probably nailed the bottom of this minor sell-off today. I think we go up next week on IWM/RUT as it is oversold now. I got in a bit early but I was following my rules to sell credit put spreads when IWM is down 4% from its 10-day high. The next time I am planning to sell some more credit put spreads is if we can get below 109.

    My current IWM holdings:

    April 108/106 - making me nervous but I think it will survive next week
    May 104/102 - added more contracts to this position yesterday. had this spread for a while now
    June 98/96 - brand new position that I started last Friday. I am thinking of adding to it next week

    On my other account, I have the following:

    May 102/100
    June 96/94

    ReplyDelete
  2. Thanks for the correction Jonathan.
    Your 108/106 is not that bad. I think we're due for a rest this week. When would you adjust it if need be?
    The rest of them look good.

    Cheers,
    LT

    ReplyDelete
  3. If we go below 109, I will adjust. I will be playing this one pretty close. Believe it or not, when I put on this position, it was less than 10 delta. So IWM has come down a long way from its recent high. I hate to smoke the hopium but I have a feeling we will stabilize next week and not go down below 110. If my analysis is incorrect, I will be adjusting this position.

    ReplyDelete