TRADE IDEA: TLT AUG/SEPT 120/27 DOWNWARD PUT DIAGONAL
Short on strength/horizontal resistance ... .
Metrics:
Max Profit on Setup: $208/contract
Max Loss on Setup: $489/contract
Break Even: 122.08 vs. 122.11 spot
Debit Paid to Spread Width Ratio: 489/700 = 69.9%
Notes: This assumes that this level (122) sticks around or is available at NY open. Ideal profit would be ~20% of what you put it on for (.20 x 4.89 = .98/contract). Roll short put out on significant decrease in value (generally 50% max).
Metrics:
Max Profit on Setup: $208/contract
Max Loss on Setup: $489/contract
Break Even: 122.08 vs. 122.11 spot
Debit Paid to Spread Width Ratio: 489/700 = 69.9%
Notes: This assumes that this level (122) sticks around or is available at NY open. Ideal profit would be ~20% of what you put it on for (.20 x 4.89 = .98/contract). Roll short put out on significant decrease in value (generally 50% max).
Comment:
Alternative trade in TBT: Aug/Sept 37/33 upward call diagonal, 2.60/contract, BE 35.60 vs 35.71 spot, max profit 1.40 on setup, debit paid/spread width ratio: 65%.