With the VIX above 23, RUT down 20% from its peak and all the oscillators pointing to an oversold environment, I'm going with a Credit Put spread using February options.
Trade Details:
SELL 4 February RUT 1180/1170 Credit Put spreads @0.70
Credit: $280 (0.70 x 4 x 100)
Max Risk: $3,720 (9.30 x 4 x 100)
The max risk in this position is $3720 and the return (or loss) will be based on this "investment". Of course, in case of loss I would never allow it to reach that maximum and some defense would be applied in advance. But for the purpose of calculating a % return on risk at the end, this amount of $3,720 will be used.
(Click on image to enlarge)
RUT Chart for future reference:
(Click on image to enlarge)
Trade Update (Jan 8, 2019)
Closed 4 February RUT 1180/1170 Credit Put spreads @0.25 debit
Net gain: 0.45 per spread (original credit of 0.70)
Return on Risk : 4.8% (0.45/9.30)
Trade Details:
SELL 4 February RUT 1180/1170 Credit Put spreads @0.70
Credit: $280 (0.70 x 4 x 100)
Max Risk: $3,720 (9.30 x 4 x 100)
The max risk in this position is $3720 and the return (or loss) will be based on this "investment". Of course, in case of loss I would never allow it to reach that maximum and some defense would be applied in advance. But for the purpose of calculating a % return on risk at the end, this amount of $3,720 will be used.
(Click on image to enlarge)
RUT Chart for future reference:
(Click on image to enlarge)
Trade Update (Jan 8, 2019)
Closed 4 February RUT 1180/1170 Credit Put spreads @0.25 debit
Net gain: 0.45 per spread (original credit of 0.70)
Return on Risk : 4.8% (0.45/9.30)
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