Folks, a few days ago I put on a Bull Put Spread on CSX (a credit spread) where I got paid to put on the position….for those of you that do not understand this type of option spread trade don’t worry as we’ll be adding many training video’s in our Learning Center on our web site detailing what you need to know in order to analyze, trade and then monitor any type of trade position. The end result of our Member training is to make you a much better investor and trader.
As you can see in the P&L graph below I adjusted the CSX Bull Put Spread by rolling out to March and down to lower strike prices thus reducing by a good deal my break even…..this is a good thing when you are bullish on a stock as it gives the underlying stock more room to “bounce” around…in addition, this particular adjustment also is nice in that it increases my potential return up to 22% in under 43 days.
(Click on chart if unable to read)
Below is the daily stock chart of CSX showing the “profit zone” of this Bull Put Spread….the entire green area represents a profit to me should CSX close anywhere in this zone during the next 43 days….this is one of the reasons why credit spreads can be so nice as an augmentation to your overall trade strategies since you can make money if the stock goes up, stays neutral or even goes down…
My other Bull Put Spread is in UNH for Feb expiration and is doing well so no trade adjustment is needed thus far….
Trade Smart — Not Often