Wednesday, July 18, 2012

Shorting $RUT via Aug Bear Call Spreads

Closing down the call side for 83% of max profit.  Not bad for less than 4 whole trading sessions.  Will look to redeploy them on further strength.

BTC RUT Aug 12 850/855 bear call spreads for ($0.28-$0.18) x 100 x 5 lots = $50 paid vs. $300 received = $250 profit

Spain is in trouble, Greece may exit the euro, blah blah blah.  Nothing new has been said.  With that, I'm going to take a small nibble long on today's big drop.

Already had bear call spreads on in the Russell 2000 (RUT) from last week's surge higher.  Now, with the index right at the 50- and 200-day moving averages, I'm selling bull put spreads to make an iron condor.  Because of today's drop, volatility (and premiums) have spiked.  This allows me to stay far OTM.

Short strike is placed under all the moving averages, under the Bollinger band, under support at ~740.  Even nearly 5 ATRs away.  90% probability of achieving max profit.  Not bad for a potential 10% return expiring in 25 calendar days.

Sold RUT Aug 12 715/710 bull put spreads for ($4.45-$3.95) x 100 x 5 lots = $250 received

First new position for August opex.
Continuing with my thesis that this bull run is losing steam, shorting the market here.  Staying above the highs of the year, to give it plenty of room to run in case I'm wrong.  Also using the resistance around 830 to help slow down more run up.  Short strike is 3.5 ATRs away.  Current probability of max profit is 83%.

Sold RUT Aug 12 850/855 bear call spreads for ($2.57-$1.97) x 100 x 5 lots = $300 received

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