Stock / Symbol: Russell 2000 / RUT;
Option Strategy: [private_monthly]bull put spread[/private_monthly];
Price at trade post: $1141.93
Reasoning: With 38 days till September expiration, I'm putting on a [private_monthly]bull put spread[/private_monthly] on RUT. We have an expected deviation of[private_monthly] +/- 69 points between now and Sep expiration. I'm going to be a little more conservative and account for a move of 100 or so points. I'm selling the [private_monthly]1040 puts and covering with the 1035 puts for a net credit of $0.50[/private_monthly]. We'll need RUT to drop under its current level to get filled, so I'm using a GTC order. The trade's overall greeks are: 1.62 delta, 2.0 theta, and -7.4 vega. The probability of success on this trade is 86%. If RUT trades [private_monthly]up significantly, we'll look to either close the trade or add a bear call spread, making the trade into an iron condor.[/private_monthly]
Trade Details:[private_monthly]
STO -2 RUT Sep14 1040 puts
BTO 2 RUT Sep14 1035 puts
for a min net credit of $0.50 per contract. (GTC order, limit order). The current mid is $0.40.
Requirements:
Cost/Proceeds ($100.00)
Option Requirement $1000
Total Requirements $900
Estimated Commission $6
[/private_monthly]
Max Risk: $900
Max Reward: $100 or 11.1%[private_monthly] at / over $1040 [/private_monthly] by Sep 19
Profit Range: [private_monthly]$1040+ by Sep 19[/private_monthly]
Suggested Upside stop: NA
Suggested Downside stop / adjustment point: $1085
Non-members, click here for access
