Stock / Symbol: PowerShares QQQ / QQQ
Option Strategy: [private_monthly]put spread[/private_monthly]
Price at trade post: $64.20
Reasoning: I'm adding this position to smooth out the greeks on our open positions + give us a bit more protection in the event of a market drop if/when we fly off the fiscal cliff. Our current greeks are: 71 Delta, 15.5 Theta, and -38 Vega. Our current open risk on all positions is $2,400 with a max reward of $600 or 25% The addition of this trade will mostly effect the Delta, lowering it to 47, which is good. The adjusted Theta will be 15.10 and the new Vega will be -36. This switches our max risk to $2560 and max reward to $480 or 18.7% by Jan 18.
Trade Details:[private_monthly]
BTO 1 QQQ Jan13 65 put
STO -1 QQQ Jan13 61 put
for a max net debit of $1.30 per contract (day order, limit order). The mid is currently at $1.26. Try for the mid +.02.
Requirements:
Cost/Proceeds $130
Option Requirement $0
Total Requirements $130
Estimated Commission $3
[/private_monthly]
Max Risk: $130
Max Reward: $270 or 207% at/under $61 by Jan 18
Profit Range: $0 to $63.70 by Jan 18
Suggested Upside stop: @ $66
Suggested Downside stop: NA
Non-members, click here for access
