Pull-up your SOX
23Feb2007 Filed under: Credit Spreads Author: OptionPunditFor the OP readers who are watching semiconductor index $SOX, one of the few bright spots in today’s market, $SOX is struggling to cross $490 area. It briefly penetrated $490 but still trading below that. Once $490 is crossed comfortably, it will serve as support area and I may open a bull put spread once it’s there. The next major resistance area will be $500 followed by $520.
My ideal bull put spread will be $480 put short/$475 put long (Mar).
IV is >20% of the bull put trade and hence will offer a nice premium (in the range of $1.30) for fair risk ($3.70). If shorts expire worthless, the rewards are expected to be 35% for 3 weeks holding. Theta will start it’s magic from Monday fairly quickly.
Here is the chart–>
I am opening another income trade. I shall post to registered users once the trade is filled. Stay Tuned !!
Profitable trading, OptionPundit
bull put spread, credit spread, Credit Spreads, option trading, SOX, stock options2 Responses to “Pull-up your SOX”
Leave a reply
About this blog
OptionPundit© (OP) is designed for novice as well as serious option traders. It is a stock & option trading blogsite that is dedicated to the following objectives: read more ⇒
OPN Performance
AP Biz News
- Profit warnings, poor job outlook weigh on stocks
- Intel will miss its already-lowered 4Q targets
- Time Warner expects $25B charge, loss for year
- CBO projects $1.2 trillion deficit for 2009
- Russia stops all gas supply to Europe via Ukraine
- New papers filed in Madoff case
- Continental flight powered with biofuel takes off
Stay Informed (RSS or Mobile)
Been There, Done That
azamaniac
March 1st, 2007 at 12:35 pm
may i know if u go more on index play or stocks play? and if so, why - wish to learn more
OptionPundit
March 1st, 2007 at 12:45 pm
index vs stocks. Reasons:
1) Good premium
2) Less chances of huge gap-up or gap down
3) Individual stocks has inherent risk i.e. earnings, FDA or any other news and stock can behave violently. I will then need to keep track of all event. With indices that effect dampens as so many stocks are part of index.