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Tuesday, September 18, 2018

SPX credit put spread (options)

Monday, 9/17/2018 (Expiration Day)

Trade 1 (11:45:23 am, PT)

sell -4 Sept 17, 2018  2890 puts at $0.40
buy +4 Sept 17, 2018  2875 puts at $0.05 (cheap wing)


Why did I place this trade?

It was late in the day and SPX appeared to stabilize around 2895.


Comments:

At 12:54 pm (PT), SPX was trading around 2886, so my short put (2890) was in-the-money (ITM) with only 4 minutes remaining.  It was time to ROLL my short puts to the next cycle (9/19/2018 expiration).  

Simply buying back the short puts without rolling or allowing them to expire ITM would have resulted in a loss of over $1000.


Trade 2 (12:54:55 pm, PT) ROLL

buy to close +4 Sept 17, 2018  2890 puts at $3.46
sell to open -4 Sept 19, 2018  2885 puts at $9.21

The roll gave me a new credit of $5.75

Then I had to buy (to open) 4 new wings with a Sept 19, 2018 expiration:
+4  Sept 19, 2018  2800 puts at $0.95 (debit)


Tuesday, 9/18/2018 (7:43:24 am, PT)

my preset buy-to-close order filled at $2.00

I'm going to leave open the 4 long puts ("wings") so I can use them again on 9/19/2018 (for my next vertical put spread).  Most likely they will expire worthless on 9/19/2018.


PROFIT:   $1260 (one day)