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CME Bull Put Spreads Strategy – Returned +10.5% in Mar. 07

In article, “CME Buying CBOT”, we analyzed Chicago Mercantile Exchange’s (CME) purchase of CBOT (BOT), and in article, “CME Bull Put Spreads Strategy – Returned +7.5% in Feb. 07”, we illustrated the profit potential of a bull put spreads strategy for CME and we selected positions for options expiration in March of 2007, which returned a very nice +10.5% in 22 days.

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Recently a bidding war has erupted for CBOT as outlined in article, “Two Exchanges May Enter Bidding War to Acquire the Chicago Board of Trade”.

Even if the CME/CBOT merger does not come to fruition, CME is looking bullish 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
Bid Buy
Ask %Return Net
CNMPT 07 APR 500.0 (29) 3.4 CNMPQ 07 APR 490.0 (29) 2.5 9.9 0.9

The bull put credit spreads positions selected for CME can be entered for $1000 per contract with a potential return of +9.9%, in only 29 days. As long as the price of CME remains above the short strike price at options expiration in April, the position will be fully profitable.

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If the stock price of CME closes below the short strike price of $500 at options expiration the position will not return the maximum profit and could potentially result in a loss, possibly result a significant loss. If the stock price of CME is below $490 at stock options expiration, the position will essentially lose everything that was invested except the initial net credit of $90/contract.

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.

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.

PowerOptions‘ sister company PowerOptionsApplied provides expert stock option trading recommendations. PowerOptionsApplied specializes in covered calls, selling naked puts and iron condor stock options strategy recommendations. PowerOptionsApplied provides a 30-day risk free trial of its service.

[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]

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