Short Call Credit Spread (RAD)    Comments?

Closed: Profit $92

Market Close July 3

SymbolPositionPriceCloseP&L
RAD Short Call Spread        
RAD Jul02 $8.50 Call -5 0.292 0 146
RAD Jul02 $9.00 Call 5 0.108 0 -54
Total   -0.92 0 92

19th June, 2015

Option Credit Call Spread Payoff RAD Stock Chart

Payoff Grid

Going for a bearish spread on RAD today. I am neutral to bearish on the direction on the stock and implied vol is relatively high, even though it has already started a decline. The put skew indicates negative sentiment with high prices pushing up the implied volatilities.

RAD Volatility Chart

At 37% implied at the money vol, the $8.50/$9 call spread gives a breakeven point of $8.90 on the upside. With 12 days to go there is a 74.21% chance that the stock will remain under this price by the expiration date.

At 5 contracts, I will make $100 if the stock remains below $8.90 but lose $150 if it rallies above that level by 2nd July.

Update 19th June

Post Friday's session, RAD ended the sessio slightly positive but the position is down $45.50 already.

Update 3rd July

RAD closed the week out at $8.39, below the $8.90 upper limit. Both calls expired worthless so the spread was profitable by the premium received when establishing the trade of $92. Here's the chart;

 

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