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Pull-up your SOX

Published on February 23, 2007

Pull-up your SOX

February 23, 2007

For 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–>sox-chart-02232007.png

I am opening another income trade. I shall post to registered users once the trade is filled. Stay Tuned !!

Profitable trading, OptionPundit

2 Comments

  • Avatar azamaniac says:

    may i know if u go more on index play or stocks play? and if so, why – wish to learn more

  • Avatar OptionPundit says:

    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.

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