In article, “Bearish on Oil Stocks?“, we outlined a bearish strategy for oil stocks for the next few months. Almost every single bear call credit spreads stock options investment position selected in the article returned the maximum possible return with an average return of 5.1% in only 12 days.
Only the SU position returned less than the maximum return, but even that position returned +3.5% (maximum possible return was +5.3%).We still consider a bearish strategy on oil stocks to be potentially lucrative, and on October 23, 2006 we searched for bear call credit spreads stock options positions for oil company stocks with all options expiring on November 17, 2006 and found the following positions:
| SmartSearchXL search on October 23 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Sym |
Stock Price |
Sell Option |
Expire &Strike |
Bid | Buy Option |
Expire &Strike |
Ask | %Return | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| OXY | 46.39 (-0.63) | OXYKJ | 06 NOV 50.0 (26) | 0.35 | OXYKK | 06 NOV 55.0 (26) | 0.05 | 6.4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PTR | 109.69 (-0.14) | PTRKC | 06 NOV 115.0 (26) | 0.60 | PTRKE | 06 NOV 125.0 (26) | 0.15 | 4.7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BPT | 72.71 (-0.64) | BPTKO | 06 NOV 75.0 (26) | 0.50 | BPTKP | 06 NOV 80.0 (26) | 0.15 | 7.5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Analysis
Three positions were found with a probability of success greater than 78%, OXY, PTR and BPT, with all of the positions having potential returns in the +5 to +7.5% range with only 26 days until stock options expiration. These potential returns will be fully realized provided the price of stock is below the short option on options expiration day. For example, the OXY bear call credit spreads position will be profitable as long as the price of OXY is below $50 at options expiration.
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PowerOptions provides Internet based tools for analyzing stock options with specific search criteria and for finding potentially lucrative option income. For those seeking to execute a bear call credit spreads investment strategy for their personal portfolios, PowerOptions provides an Internet based search engine for finding potentially lucrative income producing bear call credit spreads stock options positions.
[tags] bear call credit spreads, investment strategy, option income, poweroptions, stock options [/tags]