S&P 500 ETF Trust (SPY)

Lot 2023-10

Update 11/2/2023: I exited my short bull put vertical spread on November 2, 2023, eight days before expiration, for a $0.45 debit per contract/share, a profit before fees of $83 per contract. Shares were trading at $426.73, up $7.46 from the entry level.

The Implied Volatility Rank at exit was 27.3%, down 9.4 points from the entry level.

I exited on the first day after entry because the position reached at least 50% of maximum potential profit, my normal exit point for options positions.

Shares rose by 1.8% over one day for a +649% annual rate. The options position produced a 184.4% return for a +67,322% annual rate.

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I have entered a bull put vertical spread on SPY, using options that trade for the last time nine days hence, on November 10. The premium is a $1.28 credit per contract share and the stock at the time of entry was priced at $419.27.

The Implied Volatility Ratio stood at 36.8%.

Premium:	$1.28	Expire OTM
SPY-bull put spread	Strike	Odds	Delta
Puts
Long	411.00	79.0%	20
Break-even	417.28	72.5%	27
Short	416.00	66.0%	34

The premium is 51.2% of the width of the short/long spread. The profit zone covers a 0.5% move to the downside and an unlimited move to the upside.

The risk/reward ratio is 2.9 :1, with maximum risk of $372 and maximum reward of $128 per contract.

By Tim Bovee, Portland, Oregon, November 1, 2023

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.