Stock / Symbol: S&P500 Index / SPX
Option Strategy: [private_monthly]bull put spread[/private_monthly]
Price at trade post: $1822
Reasoning: Today's market decline is pushing up volatility, providing us with a nice opportunity for a bull put spread on SPX with February expiration options. Although the Standard deviation is[private_monthly] +/- 72[/private_monthly], I'm giving some more room to the downside. The greeks going into this trade are: 2 delta, 3.3 theta, and -14 vega. Setting a downside stop at [private_monthly]1775[/private_monthly], where we'll either exit or adjust. If the market turns around, we'll look to add a [private_monthly]bear call spread[/private_monthly], thus converting the position to an iron condor. Probability of success on this trade is 90%.
Trade Details:
[private_monthly]
STO -2 SPX Feb14 1690 puts
BTO 2 SPX Feb14 1680 puts
for a min net credit of 0.40 per contract. The mid is currently at $0.45 (day order, limit order).Note: if you're not filled today, it's ok to retry tomorrow.
Requirements:
Cost/Proceeds ($80)
Option Requirement $2,000
Total Requirements $1,920
Estimated Commission $6
[/private_monthly]
Max Risk: $1,920
Max Reward: $80 or 4.1% @ [private_monthly]1690 +[/private_monthly] by Feb 21
Profit Range: at/over [private_monthly]$1690[/private_monthly] by Feb 21
Suggested Upside Stop NA
Suggested Downside Stop @ $1775
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