NEW STRANGLE & SPREAD PLAYS
Ultra S&P500 ProShares - SSO - close: 24.84 change: -2.65 stop: n/a
Why We Like It:
We want to capture the move with a market neutral strategy like a strangle.
Note: The SSO is an ultra-long ETF that typically moves twice the daily performance of the S&P 500 index.
What is a strangle? It's when a trader buys an out-of-the-money (OTM) call and an OTM put on the same stock. The strategy is neutral. You do not care what direction the stock moves as long as the move is big enough to make your investment profitable.
We're suggest readers buy the December $30.00 call (SOJ-LD) and the December $20.00 put (SOJ-XT). Our estimated cost is $3.75. We want to sell if either option hits $6.00.
Entry alert: We would only open positions in the $23.50-26.50 zone. If the SSO gaps open tomorrow wait for a move back into the entry range. The closer to $25.00 the better.
BUY CALL DEC 30.00 SOJ-LD open interest=3687 current ask $1.95 -and- BUY PUT DEC 20.00 SOJ-XT open interest= 393 current ask $1.80