[Opening Bearish Call Spread on the "Diamonds" (DIA)]
Dear Member:
As the Dow continues its descent, I am placing an order to open a Feb bearish call spread on the Diamonds (DIA). I am placing an order to simultaneously sell the Feb 125 calls (DAWBU) and buy the Feb 126 calls (DAWBV) for a credit limit of 21 cents. If filled and DIA remains below 125 until Feb expiration and I make no adjustments, this would represent a potential before commission return on risk of 26.5%. I once had a student who scoffed at a 20 cent credit on a $1 spread, but he is still floundering and I believe that a 26% ROR in 23 days isn't too bad.
DISCLOSURE: At the time of publication, I have no position in referenced options or DIA.
Sincerely,
Bill Kraft
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