Well, I promised in my 2007 recap that I’d be off to the markets looking for a good trade for 2008. It just happens that I found an excellent option to fill the papermoney portfolio, and my own personal account.

Late last night, while scouring the option chains in my tos trading platform. I noticed a nice opportunity to sell a bull put spread at the 670/660 strike prices. With the at about 750 when I made the trade, this was a great opportunity with about 80 points of downside cushion. Not only is there a nice cushion, it appears that 730 is a huge resistance point.

The position is well away from the current levels on the , and with the being as high as it has been lately, the position could be sold for around $0.69 cents or so. I put in the order, and received my papermoney fill early in the am.

Just to show that these can actually be done, I received a fill in my real account at $0.75! That is more credit that I was asking the market for! Again, the value of a great broker!

Here is a quick summary of the trade:

• Sold 75 670/660 Bull Put Spreads @ $0.69
• $5,175.00 Credit
• ($234.95) Commissions
• Total Credit: $4,940.05
• Account Cash Balance: $147,634.60
• Risk*: ~6% or so as of the time of the order.
• Return: ~6.5%
• Margin Required: $75,000

I’ll keep an eye on this one and may close it out early to capture some quick profits and leave the risk off the table. After putting the position on, the market jumped up at the end of the day and this position has captured close to $3,000 in value already.

If this trends continues into the Friday session, I may pull it off the table and keep the profits.

*I’ve defined Risk as the calculated probability that the trade will expire “in the money” or against me. The TOS platform does this for me. Quite nice actually

Categories: Papermoney