Friday is Quadruple Witching day when stock index futures, stock index options, stock options and stock futures expire. Also, Friday is the SPY Ex. Dividend date and historical trends suggest that the SPY 3Q dividend should be $.69 per share which is the amount the EFT is expected drop in value if the price is flat at the open. We are forced to take the draw down on the SPY call spread and immediately exit the position to avoid the risk of assignment on the $144 short call. It is highly improbable that the SPY ETF will pull back much over the next week and too risky to do a short term trade adjustment.
SPY Position Update
SPY closed at $146.70 on Wednesday â€“ the July call spread is approx. $3,600 in the red
The August 13th ouch Potato published a September expiration month SPY bear call spread
We plan on immediately closing out this position tomorrow for an approx. $3,600 loss (see tables below)
As mentioned above, it is risky to continuing maintaining the short $144 SPY call contracts as traders will start exercising the option to assign the contracts ahead of Friday's expiration date.
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.