Sunday, January 22, 2006
Puts... after the crash!
Now it's time for the good, the bad, and the ugly! HA! OK, here we go.....Credit spreads
We bot the Feb 1125's for .40 and sold the Mar's 1125 for 1.20 for a total spread of .80 and a hopeful profit of .40. The current prices are:
Feb 1125's are 1.00 and the Mar 1125's are 2.80. The spread is now 1.80. We have an immediate loss of 1.00 (180-.80). This isn't good! Before we make a conclusion on this if we look at the calls we sold we made .50 on the call spreads so our real loss is only .50.
Let's take a look at the Debit Spread:
We sold Feb 1270's for 9.50 and bot Mar 1270's for 16.20. We paid 6.70 for this spread and hope to make 2.80 on this... In a perfect world.
It's now currently trading for....
Feb 1270 for 19.30 and the Mar 1270 for 27.20. Oh man, this could hurt. The net spread is now 7.90. Hmmm, that really isn't that bad? We only paid 6.70 for it and now it's worth 7.90? Hey that isn't bad is it???? Or is it? We made a potential 2.20 in 3 days but we had better look at the calls before we call it a victory. We lost 1.95 on the calls debit spreads... but wait. I'm getting ahead of myself. I'm saving that for the next post.
Now that I have you salivating, I'm getting too tired to finish this! I will have a summary post soon and in fact maybe I will tract these trades every Friday until I would close them.
Trader X
We bot the Feb 1125's for .40 and sold the Mar's 1125 for 1.20 for a total spread of .80 and a hopeful profit of .40. The current prices are:
Feb 1125's are 1.00 and the Mar 1125's are 2.80. The spread is now 1.80. We have an immediate loss of 1.00 (180-.80). This isn't good! Before we make a conclusion on this if we look at the calls we sold we made .50 on the call spreads so our real loss is only .50.
Let's take a look at the Debit Spread:
We sold Feb 1270's for 9.50 and bot Mar 1270's for 16.20. We paid 6.70 for this spread and hope to make 2.80 on this... In a perfect world.
It's now currently trading for....
Feb 1270 for 19.30 and the Mar 1270 for 27.20. Oh man, this could hurt. The net spread is now 7.90. Hmmm, that really isn't that bad? We only paid 6.70 for it and now it's worth 7.90? Hey that isn't bad is it???? Or is it? We made a potential 2.20 in 3 days but we had better look at the calls before we call it a victory. We lost 1.95 on the calls debit spreads... but wait. I'm getting ahead of myself. I'm saving that for the next post.
Now that I have you salivating, I'm getting too tired to finish this! I will have a summary post soon and in fact maybe I will tract these trades every Friday until I would close them.
Trader X
