In the article, “CME Buying CBOT”, we analyzed Chicago Mercantile Exchange’s (CME) purchase of CBOT (BOT), and in article, “CME Bull Put Spreads Strategy – Nice 5.8% in Ten Days”, we illustrated the profit potential of a bull put spreads strategy for CME and we selected positions for options expiration in January of 2007, which returned a very nice +5.8% in 24 days.
The bull put spreads strategy is a good strategy to consider when the stock price of a stock is so high, an average investor would balk at attempting a covered calls stock options position. For example, to enter a CME covered calls stock options position requires a minimum of about $59,000, but a bull put spreads strategy can be entered for much less capital.
We’re still bullish on CME and using PowerOptions powerful stock options tools to search for potential candidates returned the following bull-put credit spreads stock options position.
| Chicago Merc. Exch. Hldgs. Inc. (CME) $588.90 February Expiring in 24 Days | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sell Option |
Expre &Strike |
Bid | Buy Option |
Expire &Strike |
Ask | %Return | Net Credit |
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| CNMNH | 07 FEB 540.0 (24) | 3.2 | CNMNF | 07 FEB 530.0 (24) | 2.5 | 7.5 | 0.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The bull put credit spreads positions selected for CME can be entered for $1000 per contract with a potential return of +7.5%, in only 24 days. As long as the price of CME remains above the short strike price at options expiration in January, the position will be fully profitable. If the stock price of CME closes below the short strike price of $540 at options expiration the position will not return the maximum profit and could potentially result in a loss, possibly a significant loss. If the stock price of CME is below $530 at stock options expiration, the position will essentially lose everything that was invested except the initial net credit of $70/contract.
Competitors:
Competitors for CME include: CBOT Holdings Inc. (BOT), Deutsche Börse AG (private), and LIFFE (Holdings) plc (private).
PowerOptions provides a free 14-day trial of its service. So join PowerOptions today, and you too can start reaping the benefits of the bull put credit spreads 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 covered calls stock options investment strategy for their personal portfolios, PowerOptions provides an Internet based search engine for finding potentially lucrative income producing stock options positions.
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[tags]Deutsche Börse AG, LIFFE (Holdings) plc, BOT, CBOT Holdings Inc., CME, Chicago Merc. Exch. Hldgs. Inc., bull put spreads, bull-put credit spreads, investment strategy, iron condor, option income, poweroptions, selling naked puts, stock option trading, stock options[/tags]