Call spread/ Put spread on VIX on 5/15/2013

VIX is a trademarked ticker symbol for the Chicago Board Options Exchange Market Volatility Index, a popular measure of the implied volatility of S&P 500 index options. Often referred to as the fear index or the fear gauge, it represents one measure of the market's expectation of stock market volatility over the next 30 day period.

Stockwinners is bullish on this name for the following reasons:

1. While the risk/reward looks like  risking 2 to make 4, stockwinners actually view the risk of VIX moving below 12 as quite low. 
2. This trade make sense as a hedge against any market correction.

Trade: Sold the VIX (12.87) June 14/12 Put Spread to Buy the June 16 / 20 Call Spread, Even Money

Breakeven & profit/loss analysis:

• Profits up to 4 between 16 and 20, max profit of 4 at 20 or above
• No profit or loss between 14 and 16, structure expires
• Losses of up to 2 between 12 and 14, max loss of 2 at 12 or below

Trade Buy 1 June $16.00 Call at $1.23 Sell 1 June $20.00 Call at $0.58 Sell 1 June $14.00 Put at $0.73 Buy 1 June $12.00 Put at $0.08 For a net debit of $0.00 Profit/Loss Analysis Maximum profit is $400.00 at strike of $20.00 Maximum loss is ($200.00) at strike of $12.00 Closing Summary Sold 1 June $16.00 Call at $1.80 Bought 1 June $20.00 Call at $0.70 Bought 1 June $14.00 Put at $0.20 Sold 1 June $12.00 Put at $0.02

Position closed on 6/5/2013 at price of $0.92 with a 100.00% gain in 20 days.

Updates

6/5/2013 2:34:58 PM

Stockwinners is closing this position and is taking profits off the table.

Buy the VIX (17.78) June 14/12 Put Spread and  sell the June 16 / 20 Call Spread for $.87

• sell 1 June 12 Put for 0.02
• Buy 1 June 14 Put at 0.20
• sell 1 June 16 Call for 1.8
• buy  1 June 20 call at 0.7

Back to Portfolio