Live Trade for today: Call Credit Spread in SPX

With SPX currently at $2393, about 12 points from the all time highs, I am looking at a Call Credit Spread. I am looking at a 24 day trade in the June 16 expiration. Sell 1  2430 Call and Buy 1  2440 Call for an $1.90 Credit.  Just filled this trade   live at 11:35 am central time with SPX at 2393.

The Delta of the short call is 20, that means there is only a 20% probability that SPX will finish over the short strike of 2430 in 24 Days. The margin or risk on this trade is $810.

Credit Spread

I am looking at making around 10% or around $80 on my risk capital of $810 for every 1 contract. I will have an order in to buy back the credit spread at $1.10 Debit as a profit target.

If SPX continues up, I will have an order in to buy back the spread at 2 times my profit target of $80. So I will buy the credit spread back for a loss if the credit goes from the initial $1.90 credit to $1.90 plus $1.60 or $3.50.

Always have a Plan before you start each trade! The position Greeks of the Trade for every 1 contract:  Deltas -6.66  Gamma  -.14  Theta  6.22  Vega  -40.42.

options trading courses

3 replies
  1. Sid
    Sid says:

    Dan, I have been following you (kind of stalking!) for a while. I find 10 point spread between long and short positions really risky and things can go pare shaped very quickly if SPX runs up close to the short strike, unless you are actively monitoring and able to close the trade based on your SL rule. If you go 5 point spread but closer to the market (to obtain a reasonable premium, higher delta) then any run up would have far less impact than in the case above. Actually you might go iron condor, in which case double premium would give you even better cushion against such run up or crash down, Just my 2c worth. All the best, Sid


Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *