This trade is fairly simple. It is called a credit spread and it is being done on the Nasdaq 100 ETF. Symbol: QQQ
Sell to Open Dec 80 Puts (.38)
Buy to Open Dec 79 Puts (.28) for a credit of .10
If you do one contract of this trade the maximum you can make is $10 while your margin, also known as the maximum you can lose is $90. So your potential return is 11%.
As long as QQQ stays above 80 this trade will make money. Right now QQQ is trading at 83.76.
The trade has a 85% probability of working out and expires on 12/20 so 36 days from now.
The plan is simple.
It the trade works, I will let it expire worthless. The options will go away and I do not need to exit the trade.
If the trade does not work out, [...]