Option Investor


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Looks like our November positions are just fine. Let's step into December with a new SPX position.

With the SPX trading at 1457.50, let's:

Sell 20 Dec. SPX 1320 puts - SXYXD
Buy 20 Dec. SPX 1310 puts - SXYXB
Credit of about $.80-$.90 ($1,600-$1,800)

The maintenance is $$20,000. There's a nice cushion of about 137 points for the five week December cycle.

It's possible that the market will retreat today and you might be able to get a little more premium. It depends on if you have the time and the patience. On the other hand, the market may continue up and you will get less.

You might start by asking for $.90 or even $1.00 and then adjust later if necessary. Here is where your trading skill comes into play. More conservative traders might opt for going further out and taking in a bit less premium.

Good luck and trade smart,


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