SPY Play

For a couple of months, the SPY has been trading between 111 and 122. Today it got up to 122 and retreated. I decided to make a play, believing that it will go down for a little while from there.

I entered the following bear put spread for November.

+122
-111

Debit on the trade is $2.97. Never played a spread that wide before. Will see how it goes.

The trade profited $29.50 today. My profit target is $100. My maximum acceptable loss is $50. Based on my option analyzer thing it seems quite unlikely that I will exit the trade on either end tomorrow.

SPY bounced around a bit today. I ended up losing $6.50 of the profit I made on the trade yesterday. Up $23 and still in the trade.

SPY closed at $120.51. According to the analyzer, if it goes up to $122.73 tomorrow I will have lost $50 on the trade and I will exit it. If SPY goes down to $118.28 tomorrow I will have made $100 and will exit at that point.

Never having worked a spread this wide I am a little nervous about it but so far so good. Not an uncomfortable risk in it anyway.

mo, bail asap. There are too many factors against you. I'd have said this yesterday, but I thought "well... maybe" too.

Anyway, what you're looking at:

- Seasonality. End of October (usually) marks the beginning of 6 months of uptrend.
- Earnings season. Google just crushed estimates. You can bet Nasdaq's going up tomorrow on that, and you can bet the market will follow. Earnings are just too much potential for either side of the trade to go wild.
- The EU crisis is softening. Leaders have been espousing that they'll rescue banks, countries, etc. for a couple days.
- The dollar is weakening (stocks are going back up as the market gains more appetite for risk).
- The market's rocketed upwards for the past week+.
- Subjective assessment of the market tells me it wants to go up since it's tired of the past few month's volatility. This isn't more than "feel", so take it with a grain of salt. However, volume's been light and there's a ton of cash on the sidelines which wants to be invested, so risk is on the upside regardless.