Hey folks, so far so good…the markets are showing a good deal of indecision yet the bulls remain very resilient…I believe the markets are trying to find a position and currently we’re in a small short term trading range… when this range breaks I suspect we’ll see a lot of movement…the key is to be ready for that move and then act accordingly…

Looking at our IBM Credit Spread (Bear Call Spread) as you can see in the P&L graph below we’re running about a 10% profit so far…and we have only been in the position for about a week and a half…for those conservative folks out there that are playing this position feel free to close it out, take your gains and move on…not bad for a short term trade…for those seeking a little bit more risk keep the trade active and go for the further decay in the short option…remember, even though the markets will be closed on Monday for the long Memorial Day Weekend holiday the short option continues to loose value…7 days per week.  But, holding a gain over the weekend is a lot of time and anything can happen, be it a news event or some other IBM specific topic that could cause IBM to move against the short position…so take your pick, close out the position or continue to ride it for another 6% gain….

As you can see with the daily chart of IBM our strike selection was above the solid resistance line which was its all time high…so, in order to loose on this trade, IBM must reach another all time high in the next few weeks for us to consider shutting the trade down for a loss…

 

Trade Smart — Not Often

hpb

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