IWM 185/180 March 16 Put Credit SpreadTrade Credit: $0.55 = 11% Return on Margin
Max Loss = 500 - 55 = $445
Strikes - Short 185 / Long 180
This morning I realized that I need to get more capital deployed based off of my trading plan (something I hope everyone has!) As such I went looking for trades, and today is not a bad day to enter trades.
Reasoning is below!
1. Recent red days = Increased IV and increased Put prices (although this is slight reduced due to a large green morning)
2. Still bumping around in the trading range outlined by the white support and resistance lines
3. Todays green move up is above the prior two days candles move, and is the beginning of a confirmation of a possible move to the top of the range. If we are headed there, this trade will hit its take profit much earlier than expiration.
I always try and keep these trades less than 30 DTE for 2 reasons:
1. it makes calculating expected return per month easier
2. Decay really ramps up after <45DTE and this just grows faster and faster. Ideally these trades are closed prior to <21DTE though as this is when other greeks can begin to bite you such as gamma.
Questions. Comments? Put em below!