[Opening Bearish Call Spread on S & P Small Cap 600 Index Fund (IJR)/Simultaneously Buying Aug 62 Calls (JINHJ) and Selling Aug 61 Calls (JINHI)/Day Order/Limit Credit of $0.25]
Dear Member:
The S & P Small Cap 600 Fund (IJR) has bounced down off the downtrend line. That line has passed down through 60 and, for the moment, at least, continues to look bearish. IJR has $1 strikes. I am placing an order to enter a bearish credit spread by simultaneously buying the Aug 62 calls (JINHJ) and selling the Aug 61 calls (JINHI) on a limit order for a credit of $0.25. If filled and if no adjustments are necessary and the stock stays below 61 at expiration, the return on risk over 15 days would be 33 1/3% before commission. A break above the uptrend will be reason to take action to adjust or exit at a loss. Since it is two weeks to expiration and successful adjustments could be difficult if it turns against me, I'll be taking a small position
If I can't get my 25 cent credit or better, I am not interested in the trade.
DISCLOSURE: At the time of publication, I have no position in the referenced options or the underlying stock.
Sincerely,
Bill Kraft
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