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NaughtyPines
Jul 27, 2021 9:47 PM

Opened (Small Account): SPY September 17th 403/408 SPV 

SPDR S&P 500 ETF TRUSTArca

Description

... for a .52 credit.

Notes: Wanted to get something on in this weakness and volatility expansion, since I only have one spread left on -- the August 27th 403/408. 11.6% ROC at max; 5.3% at 50% max.
Comments
masoudesigner
Could you please explain what do you mean by 11.6% ROC at max; 5.3% at 50% max?
Thanks you
NaughtyPines
@masoudesigner, In this particular case, the buying power effect of the spread is its width (5.00) minus the credit received of .52 or 4.48 ($448). The credit received of .52/4.48 = 11.6%. Max is realized if the spread expires worthless (i.e., price of the underlying stays above the short put strike at expiry). I generally take profit at 50% of max, which is why I have that metric posted there, too.
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