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SPX at 4665
I’m going to set up a BEAR TRAP with 23 days until expiration.
This trade is a combination of a PUT DEBIT SPREAD and a PUT CREDIT SPREAD.
I’m looking for a 10 point wide put debit spread that cost around 2.00 and a 50 point wide put credit spread that will bring in about 2.50 credit.
This will leave me with a NET credit of about 0.50
This structure has no risk on the upside and all of the risk is on the downside.
Buying Power Reduction for this structure is the difference between the widths of the spreads (50-10) or 40 points, multiplied by 100 and this makes it $4,000 per 1 contract.
Since we’re collecting 0.50 or $50 per 1 contract, this will bring BPR down to $3,950
I plan on holding this trade very close to expiration and will stop out IF/WHEN SPX breaks under 4250
Risk Profile:
Entry Order:
SPX at 4688
We’ve been in this trade for 8 days.
The BEAR moved in and now out of the trap, but that does not mean that it wont return. I’m going to close out this trade to keep things moving along.
Right now, this trade is showing another credit to close.
We opened this trade for a 0.50c credit and now we can close for a 0.20c credit. This should NET a total of 0.70c credit in total.
Who doesnt like to get paid to open and to close a trade?
Risk Profile:
Closing Trade Ticket:
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