Today, with just two weeks to expiration I entered a 1815/1820 SPX Credit Put Spread:
Sell 4 SPX August 1820 Put @3.30
Buy 4 SPX August 1815 Put @3.00
Credit Received: 0.30 ($120 in 4 contracts per leg)
Max Risk: 4.70 ($1880 in 4 contracts per leg)
Days to Expiration: 14
Break Even Point: 1820.30 (5.45% below current price of 1925 for SPX)
I normally don't enter this type of trade with just 14 days to expiration. But in this case I made an exception as I already have two Put spread positions with September options: the 1815/1820 Put side of the 1815/1820/2065/2070 SPX Iron Condor, and the 980/990 Put credit spread on RUT. Adding a third Credit Put spread position (vs only one Call Spread) in September would make me uncomfortable. At the same time I look at October, and think it's a bit far for me. So, I went with the August options. Not a problem though. I like this position a lot specially because of how the market is looking according to the 3 things I usually follow:
Stochastics: 12
McClellan: -279 (It was below -300 when I entered the trade in the morning)
Number of stocks above 20 DMA: 21%
So, with all the starts clearly aligned, it is hard for me to ignore history. The market may continue going down in the medium term, but for this trade all I care about is the next 2 weeks, and in the short term we're likely to see a rebound.
Here's a chart after market close today for future reference:
(Click on image to enlarge)
In spite of the decent sell off the last two days, current positions are looking good:
August SPX 1815/1820 Bull Put Spread $120 credit
August RUT 1050/1060/1260/1270 Iron Condor $300 credit
September RUT 980/990 Bull Put Spread $120 credit
September SPX 1815/1820/2065/2070 Iron Condor $340 credit
Check out 2014 Track Record
Related Articles:
Weekend Portfolio Analysis (August 9, 2014)
Position expires for max profit on August 15, 2014
Sell 4 SPX August 1820 Put @3.30
Buy 4 SPX August 1815 Put @3.00
Credit Received: 0.30 ($120 in 4 contracts per leg)
Max Risk: 4.70 ($1880 in 4 contracts per leg)
Days to Expiration: 14
Break Even Point: 1820.30 (5.45% below current price of 1925 for SPX)
I normally don't enter this type of trade with just 14 days to expiration. But in this case I made an exception as I already have two Put spread positions with September options: the 1815/1820 Put side of the 1815/1820/2065/2070 SPX Iron Condor, and the 980/990 Put credit spread on RUT. Adding a third Credit Put spread position (vs only one Call Spread) in September would make me uncomfortable. At the same time I look at October, and think it's a bit far for me. So, I went with the August options. Not a problem though. I like this position a lot specially because of how the market is looking according to the 3 things I usually follow:
Stochastics: 12
McClellan: -279 (It was below -300 when I entered the trade in the morning)
Number of stocks above 20 DMA: 21%
So, with all the starts clearly aligned, it is hard for me to ignore history. The market may continue going down in the medium term, but for this trade all I care about is the next 2 weeks, and in the short term we're likely to see a rebound.
Here's a chart after market close today for future reference:
(Click on image to enlarge)
In spite of the decent sell off the last two days, current positions are looking good:
August SPX 1815/1820 Bull Put Spread $120 credit
August RUT 1050/1060/1260/1270 Iron Condor $300 credit
September RUT 980/990 Bull Put Spread $120 credit
September SPX 1815/1820/2065/2070 Iron Condor $340 credit
Check out 2014 Track Record
Related Articles:
Weekend Portfolio Analysis (August 9, 2014)
Position expires for max profit on August 15, 2014
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