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03/16/2011
10:51 am Eastern
A new trading alert has been issued for immediate action:
UNDERLYING: SPY
STRATEGY: Put Credit Spread
ENTRY PRICE: $0.15
UNDERLYING QUOTE: $128.49
Trade Execution:
Sell the Mar31 120 Puts to OPEN (expire 3/31/2011)
Buy the Mar31 118 Puts to OPEN (expire 3/31/2011)
Portfolio Allocation - 20%
GTC Order
Margin requirements for this trade will be $185 per contract.
($200 margin - $15 credit received this trade = $185).
Trade Rationale:
--Short strike >6% below current market price.
--Strong support at 126, 125, 122 to slow any large decline.
--Very low Delta = <5
--Short strike below 2 week Average True Range allowing for expanding volatility.
--Market digesting Japan news well.
--Short strike located near rising lower Weekly Bollinger Band.
Call spreads may be added to create an Iron Condor if the market rises and safe trades are available with decent premium. No call trade will be forced just for the sake of creating a Condor.
*Enter this trade with an equal number of contracts for each leg being bought and sold.
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