Stock / Symbol: Russell 2000 / RUT;
Option Strategy: [private_monthly]bull put spread[/private_monthly];
Price at trade post: $1161
Reasoning: With this pullback in the market, I'm putting on a [private_monthly]bull put spread[/private_monthly] on RUT. With an expected deviation of[private_monthly] +/- 83 points between now and January expiration, I'm selling the [private_monthly]1070 puts and covering with the 1060 puts for a net credit of $1.15 or better[/private_monthly]. The trade's greeks are currently: 1.9 delta, 2.2 theta, and -7.2 vega. The probability of success on this trade is 82%. If RUT trades [private_monthly]up significantly, we'll look to either close the trade or add a bear call spread, making the trade into an iron condor.[/private_monthly]
Trade Details:[private_monthly]
STO -1 RUT Jan15 1070 put
BTO 1 RUT Jan15 1060 put
for a min net credit of $1.15 per contract. (GTC order, limit order). The current mid is $1.15.
Requirements:
Cost/Proceeds ($115.00)
Option Requirement $1000
Total Requirements $885
Estimated Commission $3
[/private_monthly]
Max Risk: $885
Max Reward: $115 or 12.9%[private_monthly] at / over $1070 [/private_monthly] by Jan 16
Profit Range: [private_monthly]$1070+ by Jan 16[/private_monthly]
Suggested Upside stop: NA
Suggested Downside stop / adjustment point: $1135
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