I know many of you anxiously await this time of the month - quickie time. Over the past months we've been quite successful in generating a nice chunk of cash in the last week of the cycle. We'll try to keep the streak going for April.
Now, let me give you all the warnings. I don't trade the quickie trades. Why? Because they require attention, skill and experience. When everything is working out well, a chimpanzee can do it. However, when these quickie trades get into trouble, you have to know how to handle trouble. Some traders do. Unfortunately, most don't. And that can get real expensive.
The monthly quickie trades are not officially Couch Potato Portfolio trades. I might mention them in the column, but they aren't necessarily tracked nor is specific advice provided.
In the past month, the volatility has come down significantly. Last month, when I suggested the quickie trades, the VIX was in the 28-29 range. Tonight, the VIX is about 22. That's a significant decrease (about 25%). As you know, when the VIX comes down, so does the amount of available premium. When the premium is lower, we have to place our bear call and bull put spreads a bit closer to where the index is trading.
That being said, let's check out the option chain to see what kind of trouble we can get into.
April Quickie Trade #1 - SPX Iron
Condor - 1360.55
Sell 20 April
SPX 1410 calls - SXZDT
Total net credit of about $1.60 ($3,200). Maintenance is $20,000. Maximum profit range is 1305 to 1410.
April Quickie Trade #2 - XSP
This butterfly has a slightly downward bias and a good risk/reward potential. You'll be risking $.29, but you'll have the potential to make $1.71. One should watch this trade and look for an opportunity to close it out early and lock in a high percentage return on a $.29 bet.
I was looking for a similar butterfly spread on the call side at 137/139/141. It came in at a debit of about $.39. If you have a slightly upside bias, it's something to consider. These butterflies are cheap bets that can be real winners.
April Quickie Trade #3 - SPX Short
Straddle - 1360.55
Profit range is 1329 to 1391. If the SPX settles within this range, you will be profitable. The closer it finishes to 1360 (our short strike), the more profit will be made. However, we'd be better served to give time decay and hopefully a lower volatility a chance to work and close out the trade for a small profit. The profit parameters can also be used as exit points.
Women Of The
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CPTI APRIL POSITIONS
On 3/5, with the RUT at about 674.50, we sold 20 RUT April 560 puts and bought 20 RUT April 550 puts for a credit of $.55 ($1,100). Maintenance is $20,000. We will look to put on a bear call spread in the future - IF it makes sense.
CPTI April Position #2 - SPX Bull Put Spread - 1360.55
On 3/10, with the SPX at about 1288, we sold 20 SPX April 1110 puts and bought 20 SPX April 1100 puts for a credit of $.55 ($1,100). Maintenance is $20,000. We will look to put on a bear call spread in the future - IF it makes sense.
CPTI MAY POSITION
CPTI May Position #1 - SPX Bull Put Spread - 1360.55
On 3/31, with the SPX at about 1316, we sold 20 SPX May 1130 puts and bought 20 SPX May 1120 puts for a credit of $.55 ($1,100). Maintenance is $20,000. We will look to put on a bear call spread in the future - IF it makes sense.
ONGOING STRATEGY - THE ZERO-PLUS Strategy
ZERO PLUS POSITION - SPX - Bull Put Spread - 1360.55
On 3/31, with the SPX at 1316, we sold 30 SPX May 1130 puts and bought 30 SPX May 1120 puts for a credit of $.55 ($1,650). Maintenance is $30,000. We have plenty of time to find a bear call spread. Let?s hope the market cooperates.
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