OPENING: XLU JUNE 47 LONG/APRIL 27TH 49.5 SHORT CALL DIAGONAL
Another defined risk, neutral to assumption setup in the April cycle ... .
The natural alternative would be to just sell short puts here (the April 20th 48's are paying .66; 32 delta), but the premium in those just didn't seem that worth it relative to buying power effect.
For example, the general margin requirement for 48 short puts would be about 9.60 with the short puts returning about 6.9% on capital at max profit. In comparison, I'm looking for a quick and dirty ~10% with this setup with the side benefits being that I'm not tying up a great deal of buying power, and I've got quite a bit of time to reduce cost basis in the long should it not go my way in short order ... .