yonglonglai.com

This is one of the best position i’ve opened for a bull put spread ever (Opened it almost 10% out of the money, ie. the stock can fall 10% over the next 30days and i’ll still be safe!!) Broker called me yesterday to put this one in… was trying to get me in at 16/15.5 for 10-11c (which was pretty good). That said, I didn’t get filled for it, today he gave me another call and said I migh be able to get in at 15.5/15 for 10c (thats 50c lower for approximately the same return!)

Check this out! I was the only guy today who managed to get the 15.5/15 bull put spread, the 10 contracts on the 15 exercise price volume was me!

Reason
Anyways, to the important bit. JBM has been channelling for the past 3-4 months and today just happen to be at the support. So firstly there’s strong support at $17, secondly there’s more support at $16, thirdly I managed to write the $15.5 puts which means i’m almost 10% out of the money! thats insane! I’ve never opened a position so far out of the money and received decent premiums.

The Trade (JBM) - Traded on 21st June 2007
Sell Jul $15.50 Puts @ $0.31
Buy Jul $15.00 Puts @ $0.21

Expiry = 26/07/2007
Share/Contract = 1000
Max Profit = 0.10 (0.31-0.21)
Max Risk = 0.40 [(15.5-15.0) - (0.32-0.21)

Return on Risk = 25%
Breakeven = $15.40

I opened 10 contracts:
Reward for trade (excluding fees) $1,000.0
Reward for trade (including fees) $790.6
Value At Risk: $4,000 (not including brokerage etc)