The stock gapped up on good earning. I could get a reasonable credit of $70 on this by selling 125P. Here are a few charts explaining the trade. My technical stop is $126 which is the high of the gap.
Again, here is the economics of the trade:
Credit received: $70
Max Risk: $430
Max Reward: 16%
No of days: 33
This is not an ideal credit spread if I use my 1% per day rule. But this spread is almost $10 OTM and hence carries a higher probablity of success.
Happy Trading
Trader R
2 comments:
So far the trade seem to be behaving!
Trader R
hi trader r,
i am a new option trader and would like to ask you how to you find your credit spread and ic.
for credit spread, normal, i am looking for gap up or down more than 1.2%, the iv skew i will choose at least 15%, profit ratio about 20% or above. i only sell the credit spread in the 2nd week. (i.e less than 20 days) I only sell put option.
can you share your idea with me?
now i am looking for ic and try to do my research on it.
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