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Friday, October 9, 2015

November 2015, RUT Credit Call Spread

Yesterday I started a new position seeing a market going up too far too soon according to my system. It's not that the market can't keep going up. With less than 40% of stocks trading below their 200 Day Average it is obvious that there is plenty of upside room in the long run, but in the shorter term, which is all I care about, the market is overly optimistic at this point and should take a pause at least.

Trade Details:
Sell 2 RUT November 1235 Call @2.84
Buy 2 RUT November 1240 Call @2.31

Net Credit: 0.53 ($106 in 2 contracts per leg)
Expiration: 43 days
Break-even point: 1236.06
RUT Price: 1162

With the baseball playoffs going, and especially my beloved Blue Jays involved in them, it was impossible for me to write this article yesterday. It would be unfair to write it after this trade is a winner. That would make me a retrospective, left side of the chart guru. I'm not. I'm a right side of the chat trader. So, I'm writing today. Not exactly the same day the trade was open (this is a free site after all), but still far from the final outcome of this position.

A RUT chart for future reference:
(Click on image to enlarge)

Current positions in the Portfolio:

October SPX 1700/1710/2195/2200 unbalanced Iron Condor
$280 credit, will expire next week without hassle.

October RUT 980/970 Credit Put Spread
$120 credit, will expire next week without hassle.

November SPX 1630/1640/2100/2110 Iron Condor
$350 credit, 6 weeks to expiration, 76% probability of success. Not bad, still plenty of room to both sides. A little concern with the Call side. I'll talk about it on the Weekend Portfolio Analysis.

November RUT 1235/1240 Credit Call
$106 credit, 6 weeks to expiration. The trade described in this article. A little infant. Obviously safe for now.


This RUT Credit Call spread did end up consuming margin in my portfolio as the Put side that completes the Iron Condor belongs to a different cycle. So, right now I have about 75% of the capital committed. Not the kind of exposure I like but two of the positions are coming off the books next Friday and they are looking very safe. That will drastically reduce my capital exposure. Other than that I'm satisfied with all these positions, the circumstances where I have entered each one of them, the credits received for them. Pretty happy with the current boat.

Off to West Palm Beach. Stay tuned for the Weekend Portfolio Analysis.

LT

Check out 2015 Track Record

Related Articles:
Weekend Portfolio Analysis (October 17, 2015)
Weekend Portfolio Analysis (November 1, 2015) 


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