Stock / Symbol: Russell 2000 / RUT;
Option Strategy: [private_monthly]bear call spread[/private_monthly];
Price at trade post: $880;
Reasoning: With 34 days till Feb expiration, I'm putting on a [private_monthly] bear call spread[/private_monthly] on RUT. The expected deviation is[private_monthly] +/- 43 points between now and Feb expiration, giving us an expected range of 837 to 923. However, like last month, I think we're closer to being overbought than over sold. So, I'm just going with a bear call spread, selling the 920 calls, covering with the 930 calls[/private_monthly]. The trade overall is -10.3 delta, 6.3 theta, and -35 vega. The probability of success on this trade is 87%. If RUT trades [private_monthly]up to $889, we'll either stop out of the trade or adjust it. If RUT pulls back quickly, I may adjust the trade into an iron condor by adding a bull put spread.[/private_monthly]
Trade Details:[private_monthly]
STO -2 RUT Feb13 920 calls
BTO 2 RUT Feb13 930 calls
for a min net credit of $0.95 per contract. (day order, limit order). The current mid is $1.00. Try for mid less .05. If not filled today, ok to try again Monday.
Requirements:
Cost/Proceeds ($190.00)
Option Requirement $2,000
Total Requirements $1,810
Estimated Commission $6
[/private_monthly]
Max Risk: $1,810
Max Reward: $190 or 10.5%[private_monthly] between $0 and $920[/private_monthly] by Feb 15[private_monthly]
Profit Range: 0 to $920 by Feb 15
Suggested Upside stop: @ $889
Suggested Downside stop: NA
[/private_monthly]
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