Pull-up your SOX
Published on February 23, 2007
Pull-up your SOX
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–>
I am opening another income trade. I shall post to registered users once the trade is filled. Stay Tuned !!
Profitable trading, OptionPundit
may i know if u go more on index play or stocks play? and if so, why – wish to learn more
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.