Option Investor


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Good Morning CPTIers,

I know it's early, but I found another interesting play for July -- this time on the RUT. Remember, it's the early bird that catches the worm. Hopefully, we won't have to eat it.

Sell 15 RUT July 630 puts - RUYSF
Buy 15 RUT July 620 puts - RUYSD
Credit of about $.55 ($825)

Sell 12 RUT July 800 calls - RUTGS
Buy 12 RUT July 810 calls - RUZGB
Credit of about $.55 ($660)

Total net credit and profit potential of $1.15 ($1,485). Maximum profit range is 630 to 800 -- that's 170 points!! Maintenance is 15,000 -- IF you have the right broker. Always double check the symbols before placing the trade.

Now, for goodness sake, these figures are GUIDELINES. You may have to adjust them up or down a bit as the market moves if you don't get filled. Use common sense.

Notice that the number of contracts is different on the bull put spread (15) than the bear call spread (12). It's my way of slightly hedging our position because the calls are closer to where the RUT is trading.

When calculating the maintenance, your broker (if it's a good one) will charge you for the spread with the larger number of contracts. In this instance, the bull put spread with 15.

Be careful and trade smart!!


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