Today I initiated a November position in RUT:
Trade details:
SELL 10 November RUT 1080 Put @3.55
BUY 10 November RUT 1070 Put @2.90
Total Credit received: $650
Days to expiration: 16
A RUT chart for future reference and self-study:
(Click on image to enlarge)
Stochastics and McClellan Oscillator both oversold. Only 26% of stocks were above their 20 Day Moving Average at the time of the trade.
I went only with half my typical position size. Simply because there is another SPX Credit Put spread in the portfolio (at 8 deltas as of this writing) and I don't want to concentrate too much risk in a similar neighborhood.
Playing this RUT spread smaller than usual allows me to sleep well even if it losses.
According to my estimates, RUT would need to lose about 5% of its price from current levels in order for me to need to defend this NOV 1080/1070 Credit Put spread. At that point, I would be closing it for about 2.20 debit. Given that a 0.65 credit was received, that would be a net 1.55 loss. In ten spreads that represents $1,550 in dollar terms. Then, I would be deploying a new spread using December options and strike prices in the low to mid 900's. Because I would be allocating my typical position size in this hypothetical adjustment, I should be able to collect a credit of $1,200 - $1,300 in dollar terms, resulting in a very high probability position that would almost totally eclipse the hypothetical loss of today's position (November RUT 1080/1070 Credit Put spread).
If you are interested in a responsible and sustainable way of trading options for consistent income with solid risk management, consider acquiring LTOptions, my options trading system to the last detail.
Check out 2016 Track Record
Sold NOV $RUT 1080/1070 Credit Put spread for 0.65 credit.— The Lazy Trader (@lazytrading) November 2, 2016
Trade details:
SELL 10 November RUT 1080 Put @3.55
BUY 10 November RUT 1070 Put @2.90
Total Credit received: $650
Days to expiration: 16
A RUT chart for future reference and self-study:
(Click on image to enlarge)
Stochastics and McClellan Oscillator both oversold. Only 26% of stocks were above their 20 Day Moving Average at the time of the trade.
I went only with half my typical position size. Simply because there is another SPX Credit Put spread in the portfolio (at 8 deltas as of this writing) and I don't want to concentrate too much risk in a similar neighborhood.
Playing this RUT spread smaller than usual allows me to sleep well even if it losses.
According to my estimates, RUT would need to lose about 5% of its price from current levels in order for me to need to defend this NOV 1080/1070 Credit Put spread. At that point, I would be closing it for about 2.20 debit. Given that a 0.65 credit was received, that would be a net 1.55 loss. In ten spreads that represents $1,550 in dollar terms. Then, I would be deploying a new spread using December options and strike prices in the low to mid 900's. Because I would be allocating my typical position size in this hypothetical adjustment, I should be able to collect a credit of $1,200 - $1,300 in dollar terms, resulting in a very high probability position that would almost totally eclipse the hypothetical loss of today's position (November RUT 1080/1070 Credit Put spread).
Trade Update - November 18, 2016
The position reaches expiration way out of the money, yielding max profit of $650
The position reaches expiration way out of the money, yielding max profit of $650
If you are interested in a responsible and sustainable way of trading options for consistent income with solid risk management, consider acquiring LTOptions, my options trading system to the last detail.
Check out 2016 Track Record
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