A bet that -- at some point going forward -- the U.S. and China will reach a meaningful trade agreement ... .
Max Profit on Setup: 2.00/contract
Max Loss/Buying Power Effect on Setup: 4.00/contract
Break Even: 40.00
Debit Paid to Spread Width Ratio: 4/6 (67%)
Notes: Roll short call out on significant loss of value (50% max,...
On occasion, I like to take small directional shots without hanging myself too far out there from a buying power perspective because I lack directional conviction or (more often), I'm working a small account where going full on covered call just isn't an option due to buying power effect. FXI has come quite far off off highs and doesn't appear hugely inclined to...
... for a 1.89/contract debit.
Max Loss on Setup: $189/contract
Max Profit on Setup: $61/contract
Break Even: 14.89 versus 14.93 spot
Debit Paid/Spread Width Ratio: 75.6%
Notes: Taking a directional shot on SLV weakness here. Will look to take profit at 20% of what I put the trade on for ... .
... for a 2.62/contract debit.
Max Profit on Setup: $138/contract
Max Loss on Setup: $262/contract
Break Even: 35.62 vs. 35.69 spot
Debit Paid/Spread Width Ratio: 65.5%
Notes: Basically, shorting treasury strength with the inverse instrument ... . Here, I'll look to take profit somewhat quickly, since I've only got one roll opportunity with this setup....
... for a 4.63/contract debit.
Max Profit on Setup: $137/contract
Max Loss on Setup: $463/contract
Break Even: 50.63
Debit Paid/Spread Width: 77.2%
Notes: Will look to take profit at 20% max; roll short call at 50% decrease in value.
This is a call diagonal that (at least currently), you would put on for a small net credit so that in the event price rips drastically away from the setup, you aren't out much.
This particular VIX setup doesn't usually work well because we're in contango the vast majority of the time, and this generally makes the back month long cost too much relative to what...
... for a 1.57/contract.
Taking a miniature directional shot here as an engagement trade while I wait for the May expiry to come into the "sweet spot."
Max Profit: .43/contract
Max Loss: 1.57/contract
Break Even: 13.57
Take Profit: 20% of max/.31 per contract
... for a 3.14/contract debit (78.5% width of spread).
Another neutral to bullish assumption setup with plenty of time to reduce cost basis. Currently, it looks like you could get a better fill than I did (mid currently at 3.00, 75% of the width of the spread, which is what you're looking for in these setups).
Here, I'm shooting for 20% of what I put the trade...
... for a 2.05/contract debit (82% of the width of the spread).
Another defined risk, neutral to bullish 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 a 2.49/contract debit.
Max Profit: $51/contract* (20.5% ROC)
Max Loss: $249/contract**
Notes: As with any diagonal, there aren't many metrics to look at. If you just leave the setup alone, however, your max loss is $249/contract, and your max profit is $51/contract. Max profit is realized with a finish above the 35 strike at expiry; max...
FXE JUNE 16TH 105/108 SHORT CALL VERTICAL
The first of the two setups is a "static" short call vertical with a break even around 106 resistance.
Probability of Profit: 58%
Max Profit: $120/contract
Max Loss: $180/contract
Notes: Look to manage at 50% profit.
FXE JUNE 16TH 107 SHORT CALL/SEPT 15TH 110 LONG CALL DIAGONAL