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[Opening Bullish Put Spread on Diamond Offshore Drilling (DO)/Simultaneously Buing Equal Numbers of Apr 75 Puts (DOPO) and Selling Apr 80 Puts (DOPP)/DAy Order/Limit $1.20 Credit] Dear Member: Diamond Offshore Drilling (DO)has broken through a downtrend resistance and the uptrend support is above 80. The stock is currently trading around $83.26. I am placing an order to open a bullish put spread by simultaneously selling equal numbers of the Apr 80 Puts (DOPP) and buying the Apr 75 Puts (DOPO) for a credit of $1.20. As I explained on my note about my attempted SLB trade today, the risk is $5 per share (times 100 times the number of contracts plus commission)less the $1.20 credit I am trying to obtain. That means that $1.20 a share (x 100 x number of contracts) will be credited to my account tomorrow if the order is filled. If the stock stays above 80 until expiration and I have made no adjustments, the return on risk would be 31.5% before commissions in a month and a day. DISCLOSURE: At the time of publication, I have no position in the referenced options or the underlying stock. Sincerely, Bill Kraft for CutLoss, Inc. P.S. It doesn't look like my SLB trade will be filled. The stock is running away from me.
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