(May 2015 Portfolio Update) : $AMGN, $TSLA trades expired in the money.
A Credit Spread is where an investor receive a net credit for entering a position, in our case, it’s $AMGN and $TSLA. In this Actual Trade Example, we are going to show you how to squeeze all the profits out of the trade and let the spread expire worthless.
In option traders terms, Credit Spreads are positive Theta, that means even if the underlying price, $AMGN or $TSLA doesn’t move, we will still make a profit every single dat until the spread expires worthless.
Although we only hold 3 positions for May, All three positions expired in the Money.
Today’s Takeway, How to gain maximum profits even if a stock like $AMGN moves sideways. We started a Vertical Credit Spread for $AMGN on March 85th 2015 with 14 days expiry.
From the charts, you can see $AMGN and $TSLA did not move by much. Contrary to popular believe, a Stock Traders make a profit by buying shares, but if you base the same price point a stock trader bought the exact stock $AMGN & $TSLA, you would be making minimal profits not taking into account slippages, commissions and other miscellaneous charges. In Options, you receive a credit by selling a spread and the gains are usually several times more than stock trading. To find out more about selling Credit Spreads, the Options Pro Module is a perfect way to get you started
May 8th 2015: Started with 56% Probability $AMGN and 67% Probability $TSLA, All trades placed on LiveTradr.com Live TDAmeritrade, Think or Swim Account.
The Live Tradr team is a group of hedge fund professionals trading their own funds delivering the latest high probability trading signals to you.