In the article, “DJIA – Stock Price Resistance“, we outlined a bearish strategy for the Dow Jones Industrial Average ($DJX) when the index is close to its historic high using bear call spreads options. In article, “DJIA – Price Resistance – Nice 8.1% for Nov 06“, we noted the success of the strategy, and we also selected new positions for December. The December selections were fully profitable returning a very nice +8.1% once again.
The DJIA is still flirting with historic highs and we still consider the bear call spread options strategy to be viable, so we’ll revisit this strategy once again for options expiring in January of 2007. Using PowerOptions SmartSearchXL search engine, we found a $DJX bear call spread options position available with a probability of success of 86.6% and a potential return of +8.1% (36 days).
| SmartSearchXL for 12/15/2006 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Sym |
Stock Price |
Sell Option |
Expire &Strike |
Bid | Buy Option |
Expire &Strike |
Ask | %Ret | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| $DJX | $DJX 124.65 (+0.48) | DJWAX | 07 JAN 128.0 (36) | 0.2 | DJWAZ | 07 JAN 130.0 (36) | 0.05 | 8.1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
As long as the $DJX is below 128.0 at options expiration on January 19, 2007, this position will return +8.1%, not bad for holding a position for only 36 days.
PowerOptions provides a free 14-day trial of its service. So join PowerOptions today, and you too can start reaping the benefits of the Dow Jones Industrial Average bear call credit spreads investment strategy.
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]