Created a putz credit spread on BTU for Sept.
Bought the $21 puts
Sold the $22.50 puts
Used 30 contracts.
Credit of $0.27
While a credit of $0.27 may not seem like much to some, it translates into only risking $3,700 to earn a potential $810,... on a deep otm, high probability trade, with a narrow 1.5 low delta strike gap.
Created a putz credit spread on LOW for October.
This is actually my 1st Oct spread.
Bought the $14 puts.
Sold the $15 puts.
Used 47 contracts.
Credit of $0.17
While a credit of $0.17 may not seem like much to some, it translates into only risking $3,900 to earn a potential $800,... on a deep otm, high probability trade, with an extremely narrow 1 point low delta strike gap.
Both companies have mixed fundamentals. A blend of stable and not so stable issues. Mostly debt related. Not too surprising given the nature of their businesses.
I'll discuss their technicals, probability calculations, and other issues at a later time.
I like both their narrow strike gaps of 1 and 1.5 as my goal is for the VIX and IV to have minimal potentially negative influence on my trades during volatile times.
Between them both being narrow strike gap, low delta trades, and both being deep otm, it gives me time to close them down if a bad market drops them suddenly, with minimal cash loss.... if any at all (assuming they have not gone ITM prior to closure.)
I could have earned a higher credit with a wider strike gap,... but the trade would then not be a stable and manageable as it now is. My preference is for a more stable credit once a trade has been intiated. And again, I'm only risking $3,700 and $3,900 on these deep otm trades, to earn $800 each.
ROI = 26 - 27% return.
I hope to trasfer these trades to the part 2 thread for further analysis and discussion, if/when it reopens.
Putz Master
Bought the $21 puts
Sold the $22.50 puts
Used 30 contracts.
Credit of $0.27
While a credit of $0.27 may not seem like much to some, it translates into only risking $3,700 to earn a potential $810,... on a deep otm, high probability trade, with a narrow 1.5 low delta strike gap.
Created a putz credit spread on LOW for October.
This is actually my 1st Oct spread.
Bought the $14 puts.
Sold the $15 puts.
Used 47 contracts.
Credit of $0.17
While a credit of $0.17 may not seem like much to some, it translates into only risking $3,900 to earn a potential $800,... on a deep otm, high probability trade, with an extremely narrow 1 point low delta strike gap.
Both companies have mixed fundamentals. A blend of stable and not so stable issues. Mostly debt related. Not too surprising given the nature of their businesses.
I'll discuss their technicals, probability calculations, and other issues at a later time.
I like both their narrow strike gaps of 1 and 1.5 as my goal is for the VIX and IV to have minimal potentially negative influence on my trades during volatile times.
Between them both being narrow strike gap, low delta trades, and both being deep otm, it gives me time to close them down if a bad market drops them suddenly, with minimal cash loss.... if any at all (assuming they have not gone ITM prior to closure.)
I could have earned a higher credit with a wider strike gap,... but the trade would then not be a stable and manageable as it now is. My preference is for a more stable credit once a trade has been intiated. And again, I'm only risking $3,700 and $3,900 on these deep otm trades, to earn $800 each.
ROI = 26 - 27% return.
I hope to trasfer these trades to the part 2 thread for further analysis and discussion, if/when it reopens.
Putz Master