Unlike SPY             , IWM's top is not as clean. A couple of levels, however, stand out -- one at approximately 126.77 (in red) (a short-term resistance level ), the second at 129.29 (in blue) (this year's high).

In considering what strike prices to go with in a short call vert in IWM             , I can either play it safe, keeping a break even for the spread above the 2015 highs; go a little more aggressive and attempt to play that short term resistance at 126.77; or attempt something in between those two levels.

In looking at a setup in short call vert using the 2015 high level as my breakeven, it immediately becomes clear that that is not going to be particularly productive. Although something like a Sep 4 129/132 short call vertical has a high probability of success (88%), the credit I would get from that would be pitiful (.16 credit). I either have to go more aggressive to the downside or not at all ... .

One possibility that takes into account the short term resistance at 126.77:

IWM             Sep 4 126.5/129.5 Short Call Vertical
POP: 80%
Max Profit: $47/per contract
Max Loss: $253/per contract
BE: 126.97

Not great, but something perhaps remedied by a larger number of contracts ... .
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