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July 10, 2013

$RUT Weekly Trade


  • Strategy: Calendar spread
  • Underlying: RUT
  • Trade: BUY +1 CALENDAR RUT 100 JUL 13/JUL2 13 1010 PUT @4.10 LMT
  • Trade Price: 4.10 debit per spread
  • Margin: $410 per spread
Trade:

We are selling 1010 PUT that expires this week (Jul12) and buying 1010 PUT that expires next week (Jul20 - monthly). Options that expire closer in time will decay faster than those that expire further out in time, so we're taking advantage of time decay here. Our goal would be to get out by Thursday with about 20% (of margin) profit or$80, and we don't want to lose more than 25% (of margin) on this trade or $100.

7/10/13 Update: This trade is closed for 7.31% gain.