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Thursday, March 10, 2016

Spiders (SPY) Ratio Put Spread

2/4/2016 (11:10:51 am, PT)  FP

buy +1 March 2016  $181 put at $2.78
sell -2 March 2016  $180 puts at $2.55

Analysis:
  • Net credit received:  $2.32 x 1 x 100 =  $232
  • Theoretical max profit:  ($2.32 + $1.00) x 1 x 100 =  $332
  • Stochastics in overbought region


2/11/2016 (11:28:05 am, PT)

sell (close) 1 March 2016  $181 put at $6.32
(stochastics in oversold region)


3/10/2016 (6:30:03 am, PT)

buy back remaining 2 short puts at $0.05

GROSS PROFIT:  $854  (GREAT trade!!)

COMMENTS:
  • My actual gross profit of $854 is much higher than the theoretical max profit because I "broke apart" my ratio spread and sold (close) my long put on 2/11/2016 when SPY was at the bottom. 
  • Once I sold (close) my long put, I ended up with an extra "naked" put.


SUCCESS!