Opening (IRA): SMH January 17th 130/225 Short Put Vertical
... for a 3.40 credit.
Comments: Adding to my SMH position on weakness, but using a setup with a lower buying power effect (BPE).
Here, I'm selling the 25 delta put and buying the put that is at a strike that is approximately one half the value of the short put strike to bring in the buying power effect by about half over going with a naked short put. The standalone 225 would cost about 221.54 to put on versus the 91.60 in buying power for this trade, with a resulting bump in ROC as a function of BPE.
Metrics:
Buying Power Effect: 91.60
Break Even: 221.60/share
Max Profit: 3.40
ROC at Max: 3.71% (versus 1.53% for the naked)
50% Max: 1.70
ROC at 50% Max: 1.86% (versus .77% for the naked)
Naturally, the warts on this setup is that I remain subject to assignment risk at the 225 strike, so need to keep that in mind as I put on trades, since BP will have to be free in order to accept assignment of a one lot at 225.
Comments: Adding to my SMH position on weakness, but using a setup with a lower buying power effect (BPE).
Here, I'm selling the 25 delta put and buying the put that is at a strike that is approximately one half the value of the short put strike to bring in the buying power effect by about half over going with a naked short put. The standalone 225 would cost about 221.54 to put on versus the 91.60 in buying power for this trade, with a resulting bump in ROC as a function of BPE.
Metrics:
Buying Power Effect: 91.60
Break Even: 221.60/share
Max Profit: 3.40
ROC at Max: 3.71% (versus 1.53% for the naked)
50% Max: 1.70
ROC at 50% Max: 1.86% (versus .77% for the naked)
Naturally, the warts on this setup is that I remain subject to assignment risk at the 225 strike, so need to keep that in mind as I put on trades, since BP will have to be free in order to accept assignment of a one lot at 225.
تم إغلاق الصفقة يدويًا
Money, take, run ... . Closed for a 2.75 debit; .65 ($65) profit.
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إخلاء المسؤولية
لا يُقصد بالمعلومات والمنشورات أن تكون، أو تشكل، أي نصيحة مالية أو استثمارية أو تجارية أو أنواع أخرى من النصائح أو التوصيات المقدمة أو المعتمدة من TradingView. اقرأ المزيد في شروط الاستخدام.