Toot Your Horn

Licia Leslie

Hi Shoppers,

If you don’t toot your own horn, who will, right?

So I need to brag a bit … I promise not to make a habit of it.

Although, I will continue to bring you high-quality recommendations on inexpensive options with short hold times.

Stick with me and you can be in position to make these returns, too. Check out my trading record here.

Onto the trade!

With SPDR S&P 500 (Ticker: SPY) trading down to $442 and closing so ugly on Friday ($.38 off the low), I believe SPY will trade down to $436 by Friday, Sept. 24.

I am sticking with my original prediction …

I’m looking at puts in the Sept. 24 expiration cycle. Why pay more for more time? I think this market will be lower next week.

Looking at the SPY Sept. 24 puts:

So …

- - If SPY opens and trades lower on Monday, I will be buying the Sept. 24 441-strike puts with an implied volatility of 15.38 and selling the Sept. 24 436-strike puts with an implied vol of 17.50.
  - I will pay up to $1.50 for this five point put spread with five days to go.
  - I will take my loss if the spread trades down to $1 and begin profit taking at $2.50 and higher.

Trade Review

- - I sure hope you were quicker than I was on those Twitter (Ticker: TWTR) puts I recommended on Monday, Sept. 13. Holy cow! I was not able to nab them (but it was definitely possible) before TWTR proceeded to trade down three bucks in the first forty minutes of trading. The Sept. 17 61-strike puts traded over $2.80! Nice win if you were able to get in.
  - JPM Morgan (Ticker: JPM), on the other hand, traded higher on Monday, so no trade executed there.
  - In Alcoa (Ticker: AA), yes, I held on way too long and rode them to zero. Not very smart, but I did think AA would participate in the overall market trading lower. It didn’t. Instead AA gapped up $1.70 on Wednesday and proceeded to trade $2.00 higher rendering my puts worthless. On to the next trade …