Ratio spread:
+3 December 2014 $195 puts at $3.70 (long puts)
-6 December 2014 $191 puts at $2.55 (short puts)
Net credit: $1.40
Cash received: ($1.40) (3) (100) = $420
Why did I place this trade?
- top of stochastics (I was slightly bearish) (see chart)
- probability of success was approximately 68%
- potential max profit: $1620
12/17/2014 (10:59:06 am, PT)
sell to close the 3 long puts at $0.48
buy to close the 6 short puts at $0.16
Net CREDIT: $0.16
It is VERY UNUSUAL to receive a CREDIT when buying back a ratio spread. This gave me a profit that's even higher than my original credit. That's why I closed the trade instead of allowing the options to expire on 12/19.
TOTAL NET PROFIT: $438.09 SUCCESS!
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