buy +4 July 2015 $216 calls at $1.78
sell -4 July 2015 $215 calls at $2.20 (32% probability ITM)
sell -4 July 2015 $205 puts at $3.03 (35% probability ITM)
Why did I place this trade?
- stochastics in "overbought" region
- high probability of success
- no matter where SPY lands at expiration, this trade will still be profitable
Analysis:
- If SPY closes between $205 and $215 (ideal outcome), profit will be $1380
- If SPY closes above $216, profit will be $980
7/6/2015 (6:30:02 am, PT)
buy back the 4 short calls ($215 strike) at $0.04 to remove the risk
7/17/2015 (expiration)
SPY closed at $212.47 (ideal!), so short puts and long calls expired "worthless"
NET PROFIT: $1347.51
Success!!
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