In an 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 the article, “DJIA Price Resistance – Another +8.1% Return – Dec. 06”, we noted the continued success of the strategy, and we also selected new positions for January. The January selections were fully profitable returning a very nice +8.1% once again. Since beginning this series on the DJIA at the end of October of 2006, this strategy has returned a very nice +21.1%, in just 3 months!
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 February of 2007. Using PowerOptions SmartSearchXL search engine, we found a $DJX bear call spread options position available with a probability of success of 77.5% and a potential return of +11.1% (26 days).
| SmartSearchXL for 12/15/2006 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Sym |
Stock Price |
Sell Option |
Expire &Strike |
Bid | Buy Option |
Expire &Strike |
Ask | %Ret | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| $DJX | 124.77 (-0.89 | DJWBW | 07 FEB 127.0 (26) | 0.3 | DJWBY | 07 FEB 129.0 (26) | 0.1 | 11.1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
As long as the $DJX is below 127.0 at options expiration in February, this position will return +11.1%, not bad for holding a position for only 26 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, investment strategy, iron condor, option income, poweroptions, selling naked puts, stock option trading, stock options[/tags]