SPY Trade

SPDR S&P 500 ETF Trust (SPY)

Lot 1

Update 10/19/2021: I exited my bull put options spread position on SPY 31 days before expiration, for a $0.54 debit per contract/share, a profit before fees of $80 per contract. Shares were trading at $450.17, up $8.92 from the entry level.

The Implied Volatility Rank at exit was 10.4%, down 10.89 points from the entry level.

My decision to exit was based on on my rule that requires exiting an options position once it has reached 50% of maximum potential profit.

Shares declined by 2% over 12 days for a +62% annual rate. The options position produced a 148.1% return for a +4,506% annual rate.


I have entered a short bull put spread on SPY, using options that trade for the last time 43 days hence, on November 19. The premium is a $1.12 credit per contract share and the stock at the time of entry was priced at $441.25.

The Implied Volatility Ratio stands at 20.1%

Premium:$1.12Expire OTM
SPY-bull spreadStrikeOddsDelta
Puts
Long428.0066.0%31
Break-even434.1263.0%34
Short433.0060.0%37

The risk/reward ratio is 3.5:1, with maximum risk of $388 and maximum reward of $112 per contract.

The premium is 44.8% of the width of the position’s short/long spread. The profit zone covers a 5% move to the downside.

How I chose the trade. I entered the traded based on Elliott wave analysis, concluding that wave 3 of Minuscule degree within wave 1 of Submicro degree began on October 6, a set-up that has upside potential.

By Tim Bovee, Portland, Oregon, October 7, 2021

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

License
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Based on a work at www.timbovee.com.

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