(Short Put Vertical) ... for a 1.05 credit.
Comments: Going short put vertical in SPX this go around to emulate dollar cost averaging into the broad market with more room to be wrong than buying shares, just to show that you can trade bigger instruments even in a smaller account. Here, though, the buying power effect gobbles up quite a bit of this little account:
Metrics:
Buying Power Effect: The Width of the Spread (10.00 minus the credit received of 1.05) or 8.95 ($895)
Max Profit: 1.05 ($105)
Max Loss: 8.95 ($895)
Return on Capital at Max: 105/895 = 11.73%
Return on Capital at 50% Max: 5.87%
Return on Capital at Max Annualized: 87.4%
Return on Capital at 50% Max Annualized: 43.7%
As with my SPY spreads, I'll look to take profit at 50% max/loss at 2 x credit received.
Comments: Going short put vertical in SPX this go around to emulate dollar cost averaging into the broad market with more room to be wrong than buying shares, just to show that you can trade bigger instruments even in a smaller account. Here, though, the buying power effect gobbles up quite a bit of this little account:
Metrics:
Buying Power Effect: The Width of the Spread (10.00 minus the credit received of 1.05) or 8.95 ($895)
Max Profit: 1.05 ($105)
Max Loss: 8.95 ($895)
Return on Capital at Max: 105/895 = 11.73%
Return on Capital at 50% Max: 5.87%
Return on Capital at Max Annualized: 87.4%
Return on Capital at 50% Max Annualized: 43.7%
As with my SPY spreads, I'll look to take profit at 50% max/loss at 2 x credit received.
