Here’s a trade I put on yesterday in my personal account. It is a straightforward put credit spread on CME.  Great for papertrading.

It is my belief that the markets will rally into the end of the month. Even without the rally, CME should do fine. It has been performing nicely the last few months and it confirms to the requirements of my new credit spread trading system that I am testing.

Sell to Open July 280 Puts 
Buy to Open July 270 Puts

Right now, you can get .85 cents credit for the trade which is $85 per spread. The max loss is $915 and so the Profit Potential is 9.3%. There are 30 days left in the trade until expiration.

The idea is to let it go to expiration and let it expire. If CME drops I would take this trade off when I was down about 15%.

The last couple free trades, PCLN and OIH worked out nicely. Good gains in both. So here is another one.

IWM

Sell May 65 Puts, Buy May 63 Puts for a credit of .28 each spread. Get out if you are down 10-15% of the margin. if it goes well, either let it expire or buy it back at .05. I prefer to buy it back because it is 45 days from expiration. Normally you do not want to sell cedit spreads with this much time but with the volatility so low, either you move closer to the money or you go out farther in time to get a decent return.

This trade has a potential profit of 16%. This is an interesting trade because IWM is the etf for the Russell 200 index. Earnings season is coming up and that will affect IWM. Also IWM is at a 52 week high. How [...]

Here’s another trade that looks good.

OIH seems to trading in a range so a condor or butterfly might work here, but I am just looking at selling some puts for now.

Sell the Apr 115 puts and buy the April 110 puts for a credit of .56.

That’s about a 12% roi.

Again, trade at your own risk. I am not using real money on this trade.

I’ve been working on a new trading system for credit spreads. This pick came from that system. So far the system has been hitting 90% winners.

PCLN: Sell Apr 210/200 Put spread for .82 credit.

Max Profit $164

Max Loss $1836

Potential ROI: 8.9%

You should take the spread off when it gets to .10, or if you are down 10%.

This is just an example, trade at your own risk.

Is Gold a bubble or the trade of a lifetime?

Maybe both.

I have not been in the gold trade myself. But several of my members are, and doing very well so far.

Here is a chart provide by one such member. It shows that the stock of gold companies, miners, etc continue to appreciate evn though gold prices peaked earlier. If this hold true this time, even if gold has peaked, which it does not look like it has, the miners will continue to rally.

Last week a member emailed saying that it looked like GLD had topped out and would I consider selling calls. My answer: No Way.

This train still has momentum on its side as you can tell from the rally today. What I did do on Friday, was to buy a debit spread in GLD.

I bought the Jan 115 Calls and Sold the Jan 118 Calls. I paid about $100 [...]

An astute member brought Amazon (AMZN) to my attention a week ago. After some uncertainty, I think AMZN is going higher or at least will not come back to the level it was at before earnings. At least until after DEC expiration. So that makes a Put credit spread a good  bet.

Sell the Dec 115 Puts and Buy the 110 Puts. My software is showing you can get this for .64 credit each.  That would be a 14.4% profit. DEC expiration is 12/19. If you can take the trade off for .10 debit, do so.

The expiration day breakeven on this trade is 114.34 and it has a 92.84% probability of success.

Here’s a quick and easy trade.

Buy Dec 590 Call, Sell Nov 590 Calls for a debit of 10.65 per spread.

If you do just one contract, it will cost you $1065 plus commissions. If RUT does not move much by Monday you should have over a 10% gain. Even if it moves about 8 points either way, you should still have close to a 10% gain.

This is a great trade to papertrade.

RUt Calendar Spread Graph

I got this trade idea from a very smart member. His observation was that POT

was channeling and that it would be a good set up for an income strategy.

The only problem was that earnings are after expiration which is in 10 days.

Earnings could move the stock but it also keeps the volatility of the options

high and that means high premium.  There is also a dividend to be paid on the 15th, which is one day before expiration. A dididend will lower the price of the stock by the amount of the dividend which in this case is 10 cents.

His idea was a butterfly. I decided to do a calendar because it is easier to adjust and share it here.

Buy 1 Nov 90 Call and Sell 1 Oct 90 Call. This trade cost me $315. My breakevens are at 86.14 and 94.40.

I feel this trade will work. But it will have to be held close to expiration. 

If POT gets outside the breakevens, exit the trade. or if you are experienced enough, add another calendar on the side of the brreakout.  If POT stays around 90, stay in as long as you can.

So far all the free trades I have posted on the blog have been profitable and have not needed any adjustments. Hopefully I can keep up the trend.

For this free trade, I got a suggestion from a member.

Eddy Hussain writes,

AAPL at 170.47
 
SELL 2 160 PUT
BUY 2 155 PUT
 
Credit .81
 
Max profit 152.00 Max loss 838.00
 
ROI-18.1%
 
Use 10% of account.
 
Probability of success 75% according to TOS.

I really like this trade because it is right below a strong level of support.  But I would not classify this trade as a conservative trade because it is pretty close to the money. 10 points in AAPL is not much. So the 75% probability of profit might be a bit misleading.  But if AAPL moves up 5 points or more this one will be a slam dunk.

Let’s see what happens. Thank you very much Eddy!

Here is a trade I found today.

83.17% probabiliy of profit and a potential 17% gain.

Sell  Aug 30 Puts at .50 and Buy the Aug 28 Puts at .25.

Total cost: .25 per spread.

If you look at the USO chart, there is some resistance at 31.60 so thi strade should do nively.

What do you think?