In article, “DJIA – Stock Price Resistance“, we outlined a bearish strategy for the Dow Jones Industrial Average when the index is close to its historic high using bear call spreads options. In article, “DJIA – Price Resistance – Revisited“, we analyzed the results of the selections in “DJIA – Stock Price Resistance” denoting a -3.2% loss and we also selected positions again for this strategy for stock options expiring in November of 2006. The selection for stock options expiring in November of 2006 was fully profitable returning a very nice +8.1% return.
The DJIA is still flirting with historic highs, so we’ll revisit this strategy once again for options expiring in December of 2006. Using PowerOptions SmartSearchXL search engine, we found a $DJX bear call spread options position available with a probability of success of 81.4% and a potential return of +8.1% (29 days).
| SmartSearchXL for 11/17/2006 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Sym |
Stock Price |
Sell Option |
Expire &Strike |
Bid | Buy Option |
Expire &Strike |
Ask | %Ret | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| $DJX | 123.26 (+0.20) | DJWLV | 06 DEC 126.0 (29) | 0.25 | DJWLX | 06 DEC 128.0 (29) | 0.1 | 8.1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
As long as the $DJX is below 126.0 at options expiration on December 15, 2006, this position will return +8.1%, not bad for holding a position for only 29 days.
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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 calendar call spread options positions.
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[tags]DJIA, bear call credit spreads, bear call spreads, investment strategy, iron condor, option income, poweroptions, selling naked puts, stock option trading, stock options[/tags]