February options expire in a few days and as illustrated below, we plan on exiting the SPY call spread position.
SPY Position Update
SPY closed at $135.19 on Tuesday - the February position is approx. $1,600 in the red
SPY is priced ABOVE its current 14-day EMA (see SPY chart down below)
SPY is trading ABOVE its 20-day Bollinger Band SMA (see SPY chart down below)
SPY is ABOVE its 50-day simple moving average (see SPY chart)
SPY is still ABOVE its 200-day simple moving average (see SPY chart)
Relative Strength Indicator (RSI) is extremely bullish (See SPY chart)
Moving Average Convergence/Divergence (MACD) is extremely bullish (See SPY chart)
The January 17th Couch Potato published a February expiration SPY bear call spread
The call spread is approx. $1,600 in the red (see tables below)
$134 strike price short call delta is .7012 (30% probability this position will be profitable)
We are rolling up the $134 short call to the $136 strike price AND increasing the number of contracts
After the trade adjustment the total position should be approx. $500 in the red with a $9,000 margin requirement
February options expire on Friday and we need to close out the $134 short call to avoid the chance of assignment. As mentioned above, we plan on doing a trade adjustment to minimize the loss. However if prices drop significantly the best move would be to just close the short call without the trade adjustment. Or regardless of the price action, simply closing out the short call is probably best if one is not comfortable adjusting a trade with only a few days left prior to expiration.
If prices rise sharply tomorrow we will probably roll the short call to the $137 strike price
Couch Potato Trader Disclaimer
All results reported in this section are hypothetical. While the numbers represented here may have been achieved or beaten by our readers, we make no representation that any individual investor achieved these exact results. The tracking for the plays listed in this section uses closing prices for the day the newsletter is published and it is not meant to imply that any reader actually received those prices (though many often do) or participated in these recommendations (even though many do). The portfolio represented here is hypothetical and for investment education purposes only. It is only an illustration of what type of gains a knowledgeable trader might receive utilizing these strategies. If you don't get close to these results, guess what. It isn't the fault of the strategies.