Thursday, March 22, 2012

Closed the $CF credit put spread trade

23mar - per my rule.. if credit spreads profits by 40-50% within 2-3 days of entering i take my profits. The assumption is that with plenty of time left till opex that i have a good chance of reentering another spread, possibly even the same strikes. But if not then i still have a profitable trade. win-win. closed spreads for 44% of the max potential profit.

yesterday - Sold Apr 160/165 credit put spreads at .70 x 10 = $700 credit.
today  - bought to close the spread at .39 x10 = $390
Profit for one day trade = $310

comments: this entry kind of snuck up on me, noticed the price testing the 50day in afternoon. presumption was that 50day held and would bounce, therefore spread decreases in value (profits to me)... sometimes they work perfect, sometimes you have to let time decay do the work. i'll take it and look to reenter lower

22mar - stock pulled back a few bucks today, testing the 50day moving average. presumption is that it holds, like last time which in hindsight was a successful test and rebound. shooting against that low from 2weeks ago as a mild support line, short strike is right at the 150day moving average with the 200 day moving up slowly.

Sold Apr 160/165 credit put spreads at .70 x 10 = $700 credit.

Trademonster shows the 165 strike has delta of .17 (currently option is priced to assume a 17% probability stock is at 165 or lower on opex)
Probability of max profit is 83%.
Target profit is 80% of the max potential ($700 is max) or if stock rallies and this spread profits 40-50% in 2-3 days will take profits.