NaughtyPines
Short

INDEX SHORT CALL VERTS -- TAKING ADVANTAGE OF RECENT HIGHS

AMEX:SPY   SPDR S&P 500 ETF
A short call vertical is a defined risk options spread that consists of a short call and a higher long call and generally assumes a bearish bias as to movement in the underlying.

With SPY             locked in a fairly long-term range between approximately 204 and 213, I have frequently taken advantage of short call verticals over the past several weeks with break evens for the spread at or above 2015 highs, whether as a standalone strategy or when legging into an iron condor (which consists of a short call vertical and a short put vertical). Although I would prefer that SPY's 6-Month Dough IVR             be greater than 35 in order to maximize potential profit from premium, it is not currently horrible (31) ... .

EXAMPLE:

Sep 4 213.5/216.5 Short Call Vertical
POP: 77%
Max Profit: $67
Max Loss: $233
BE: 214.17

Notes: I generally set these up as near to 45 DTE             as practicable. It seems like quite a bit of time out, but I generally look to exit these trades at 50% max profit, since various studies have shown that this represents a profitability "sweet spot" for many strategies. Moreover, I virtually continuously put index trades on so that I constantly have something in the hopper from here to 45 DTE             ... .

Related Ideas

Ideas Scripts Chart
United States
United Kingdom
India
España
Italia
Brasil
Россия
Türkiye
日本
한국
Home Stock Screener Economic Calendar How It Works Chart Features House Rules Moderators For the WEB Widgets Stock Charting Library Priority Support Feature Request Blog & News FAQ Help & Wiki Twitter
Private Messages Chat Ideas Published Followers Following Priority Support Public Profile Profile Settings Billing Sign Out