[Closing Bear Call Spread on SPY/Simultaneously Buying to Close Nov 121 Calls (SPYKQ) and Selling Nov 122 Calls (SPYKR)/Day Order/Net Debit $1]
Dear Member,
With the relatively sharp move up of the SP-500 and only a week until expiration, I have decided to close my bearish spread on SPY. I am placing an order to simultaneously buy to close the Nov 121 calls (SPYKQ) and sell the Nov 122 calls (SPYKR) for a net debit (before commissions) of $1.00. You may recall that I originally entered this position for a credit of $0.30 so I will sustain a loss of $0.70 if filled. This is one of the beauties of a spread since my loss was limited from the beginning. Had I just sold the 121 naked calls without buying the protective 122 calls, my loss could have theoretically been unlimited. As it is, my maximum loss is $1 less the original credit. While I hate losses, I understand that they will occur and it is best to limit them, adhering to the old adage of cut your losses and let your profits run.
DISCLOSURE: At the time of publication, I am long the Nov 122 calls and short the Nov 121 calls on SPY.
Sincerely,
Bill Kraft for
CutLoss, Inc.
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