Option Investor
Newsletter

ADDITIONAL MCM DJX APRIL 2008 POSITION 3-16-08

HAVING TROUBLE PRINTING?
Printer friendly version


We are going to place a credit spread on the call side of our APRIL DJX Monthly Cash Machine Position. We are going to place the following specific call credit spread as noted below. In addition , if you have the right broker this position will not tie up any additional margin, if you have already have the DJX put credit spread in place that was given out last week.


When this position is filled you will have in essence an iron condor in place with:

The upper position being short at DJX 132/134 = DJIA 13,200
The lower position being short at DJX 106/104 = DJIA 10,600

We are recommending the following specific DJX APRIL call credit spread

(call credit spread - bearish call spread)

^DJX $119.51

BUY DJW-DD ^DJX APR $134.00 CALL DEBIT = $0.13
SELL DJW-DB ^DJX APR $132.00 CALL CREDIT= $0.24
NET CREDIT = $0.11

INITIAL "NET- CREDIT TARGET= $0.11 or $11.00
POTENTIAL PROFIT ( X 50 CONTRACTS @ $0.11 = $550.00
MARGIN REQUIRE. 50 CONTRACTS $9,450.00
RETURN ON INVESTMENT= 5.82%

EXIT STRATEGY = 1. WATCH LIST 2. MAXIMUM LOSS SPREAD PRICE DIFFERENCE: $2.00
1. INDEX WILL BE PLACED ON WATCH LIST IF INDEX PRICE RISES TO: $127.00

DIFFERENCE IN THE STRIKE PRICES WILL BE OUR MAXIMUM EXPOSURE - WE WILL NOT USE STOPS ON THOSE POSITIONS. THEY WILL GO ON THE WATCH LIST AND BE FOLLOWED WITH INSTRUCTIONS AS TO HOW TO PROCEED OR/WHAT EXIT POINT NEEDS TO BE ESTABLISHED



Orders to purchase or sell securities through your account with optionsXpress, Inc., an independent registered broker-dealer ("optionsXpress"), shall be accepted and executed solely by optionsXpress, subject to the terms and conditions of your individual account agreement with optionsXpress. optionsXpress makes no investment recommendations and does not provide financial, tax or legal advice. All inquiries regarding your optionsXpress account, including any disputes or trading errors, should be directed to optionsXpress. Option Investor, Inc is not a registered broker-dealer and is not in the business of transacting trades. Furthermore, Option Investor, Inc is not a registered investment adviser, does not provide financial, tax or legal advice, and is not recommending that you buy or sell any particular security. optionsXpress has made its services available to you via Option Investor, Inc as a courtesy. optionsXpress and Option Investor, Inc are separate and unrelated entities. optionsXpress is not affiliated with and does not endorse or warrant the products or services of Option Investor, Inc.

Monthly Cash Machine Newsletter Archives