SPG Trade

Simon Property Group Inc. (SPG)

Update 5/10/2022: I exited my short bull put vertical spread on SPG, 38 days before expiration, for a $1.40 debit per contract/share, a profit before fees of $47 per contract. Shares were trading at $133.31, up $13.56 from the entry level.

The Implied Volatility Rank at exit was 68.2%, down 4.9 points from the entry level.

I exited on the day after entry because the position reached 25.1% of maximum potential profit, a bit above my normal 25% exit point for earnings plays.

Shares rose by 11.3% over one day for a +4,133% annual rate. The options position produced a 33.6% return for a +12,2545% annual rate.


I have entered a short bull put vertical spread on SPG, using options that trade for the last time 39 days hence, on June 17. The premium is a $1.87 credit per contract share and the stock at the time of entry was priced at $119.75.

The Implied Volatility Ratio stood at 73.1%.

Premium:$1.87Expire OTM
SPG-bull put spreadStrikeOddsDelta
Calls/Puts
Long115.0067.0%30
Break-even121.8758.0%38.5
Short120.0049.0%47

The premium is 74.8% of the width of the position’s short/long spread. The profit zone covers a 1.8% move to the downside and an unlimited move to the upside.

The risk/reward ratio is 1.7:1, with maximum risk of $313 and maximum reward of $187 per contract.

How I chose the trade. The trade was placed to coincide with SPG’s earnings announcement, after the closing bell on the day of entry. The expected move, based on options pricing, is $6.47 either way, for range of $117.23 to $123.79, and I placed the short strike within that range in order to get a better risk/reward ratio.

By Tim Bovee, Portland, Oregon, May 9, 2022

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
Creative Commons License

All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.

3 thoughts on “SPG Trade

  1. Hi Tim,

    I’m trying to calculate the 1.8% move downside, is the % movement down based on the entry price?

    Sent from my iPhone

    >

    Like

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