[Opening Bearish Credit Spread on Diamonds (DIA)/Simultaneously Buying to Open Aug 113 Calls (DIAHI) and Selling to Open Aug 112 Calls (DIAHH)/Day Order/Limit $0.35]
Dear Member:
The Diamonds (DIA) which track the Dow 30 Industrials have bumped against downtrend resistance and have fallen back. I am placing an order to create a bearish call spread by simultaneously buying the Aug 113 calls (DIAHI) and selling the Aug 112 calls (DIAHH) for a credit of $0.35. If filled and no adjustment is necessary and DIA stays below 112 by August expiration (23 days from now), this will yield a return on risk before commission of 53.8%. Note the initial spread is $1 so that would be the risk except that the market will give me 35 cents if I am filled. That leaves a risk of 65 cents so 35/65= 53.8%.
DISCLOSURE: At the time of publication I have no position in the Diamonds.
Sincerely,
Bill Kraft
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