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Registered User
Joined: 1/30/2009
Posts: 267
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Can someone please exlain this trade to me? I found it and it looks very good but I just can't seem to get my head around it. I want to do it but I need to understand it first. This is not covered in my options book.
O.K. the stock has been trading in a VERY narrow range since April. It closed yesterday at $9.13 (I'm sure most of you can figure out which stock I am talking about). So here is the trade.
Sell June09 (11) puts and buy June09 (9) puts as there is only 16 days until expiration. Now, this will credit my account around $1800 and it shows my total risk at less than $200. The R/R look very good. Can someone please explain the philosophy and exactly where this could go right/wrong?
Thanks guys.
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Registered User
Joined: 7/1/2008
Posts: 889
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why not provide the symbol?
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Registered User
Joined: 1/30/2009
Posts: 267
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JAVA
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Registered User
Joined: 12/5/2008
Posts: 81
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How many puts did you sell and how many puts did you buy?
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Registered User
Joined: 12/5/2008
Posts: 81
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Also, what were the premiums for each?
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Registered User
Joined: 6/8/2007
Posts: 6
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Vertical Bull Put Spread: JAVA @ 9.14, max loss 160, 18 loss at 9.14, 10.05 = 890 gain, all numbers figured at expiration. If you have TOS, you can use the risk profile part of the trading platform to analyze any option strategy.
Good Luck!
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Registered User
Joined: 1/30/2009
Posts: 267
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Thanks king1lou. Yes I do use TOS and I have decided to trade this in my paper account so that I can learn it. And, didn't know about the risk profile but I will surely look into it today. The more I learn, the more fun all this becomes (especially on profitable days).
This board has been a very big learning experience for me. Thank you very much everyone.
BTW, where has wse been lately?
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Registered User
Joined: 1/30/2009
Posts: 267
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QUOTE (king1lou) Vertical Bull Put Spread: JAVA @ 9.14, max loss 160, 18 loss at 9.14, 10.05 = 890 gain, all numbers figured at expiration. If you have TOS, you can use the risk profile part of the trading platform to analyze any option strategy.
Good Luck!
O.K. I can't find the risk profile in my TOS software. Could you please give me some idea of where I can find it? I have noticed that different people (for some unknown reason) have different TOS software. I have had communications with TOS about this without success. For example, I can not buy a stock and enter a stop loss at the same time. But, TOS seems to think I can. So I sent them a screen dump of my software, they sent me a screen dump of theirs, and they were totally different.
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