Stock Option Trading Results for February '07

Closed the bull put spread today for a .10 debit. This options trade was originally opened for a .70 credit, so we made .60.

Trade risk is calculated by subtracting the credit from the distance between the two strikes. The most we could lose on the 10 point spread was 10 - .70 = 9.3 or $930, per spread. Our profit was .60, to our return was .60 / 9.30 = 6.45%.

The January spread brought in a 5.3% return, so we have a year-to-date return on risk of 11.75%.

In comparison, the S&P 500 began the year with about a 1,418 open and is now trading at 1,452. The year-to-date return on the S&P 500 is 2.4%, which means that we're out performing the market by a factor of almost five times.

Okay. Enough reminiscing and back patting...

Let's look for March spreads!

Christopher Smith
TheOptionClub.com