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 – Slick +5.8% in Jan 07”, we illustrated the profit potential of a bull put spreads strategy for CME and we selected positions for options expiration in February of 2007, which returned a very nice +7.5% in 24 days.
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 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sell Option |
Expre &Strike |
Bid | Buy Option |
Expire &Strike |
Ask | %Return | Net Credit |
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| CNMOD | 07 MAR 520.0 (22) | 3 | CNMOT | 07 MAR 500.0 (22) | 1.1 | 10.5 | 1.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The bull put credit spreads positions selected for CME can be entered for $2000 per contract with a potential return of +10.5%, in only 22 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 $520 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 $500 at stock options expiration, the position will essentially lose everything that was invested except the initial net credit of $190/contract.
Competitors:
Competitors for CME include: CBOT Holdings Inc. (BOT), Deutsche Börse AG (private), LIFFE (Holdings) plc (private), and Nasdaq Stock Market Inc. (NDAQ).
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.
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[tags]Deutsche Börse AG, LIFFE (Holdings) plc, BOT, CBOT Holdings Inc., NDAQ, Nasdaq Stock Market Inc., bull-put credit spreads, investment strategy, iron condor, option income, poweroptions, selling naked puts, stock option trading, stock options[/tags]