Stock / Symbol: S&P 500 Index / SPX
Price at trade post: $1404.67
Option Strategy: bear call spread
Reasoning: With low volatility and the market looking quite toppy, we're going with a bear call spread here on SPX. If we get a market pullback, we'll look to [private_monthly] add a bull put spread, making this trade an iron condor. The 1470 calls we're selling currently have a .12 delta and a 88% chance of expiring OTM. If the SPX hits our upside stop at 1439, we'll either stop out for a relatively small loss or roll into a further out of the money call spread. IMPORTANT: once you get filled, immediately set your GTC sell order to buy back the spread for $0.15. [/private_monthly]
Trade Details:
[private_monthly]
STO -1 SPX Sep12 1470 call
BTO 1 SPX Sep12 1480 call
for a min net credit of $0.90 per contract. The mid is currently at $0.95 (current bid $0.10 / ask $1.80) (GTC, limit order).
THEN, once filled, enter the following closing order (GTC):
BTC -1 SPX Sep12 1470 call
STC 1 SPX Sep12 1480 call
for a net debit of $0.15 per contract
Requirements:
Cost/Proceeds ($90)
Option Requirement $1,000
Total Requirements $910
Estimated Commission $12.95
[/private_monthly]
Max Risk: $910
Max Reward: $90 or 9.9% by Sep 21 (8.2% on .15 buyback)[private_monthly]
Profit Range: between $0 & $1470 by Sep 21
Suggested Upside Stop @ $1439
[/private_monthly]
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