TheOptionPlayer.com executed the S&P 500 Index (SPXW) June 15th expiration (7-day) option strategy. Confirmation information is displayed directly below. Login in as a Premium Subscriber to view data/images
The difference between funds received and paid out is an approx. 39% profit if the S&P 500 Index settles above $2,635 at the close of trading on Friday June 15th.
Why we recommend it:
• The SPX index is cash settled and follows the European exercise rules where you cannot exercise early on any option positions. The options stop trading on the expiration day and settle the following morning.
• Trading cash-settled indexes will never result in the delivery of stock, as cash-settled indexes (as the name suggests) settle in cash. This means if both options expire ITM your account will automatically get credited with difference between the strike prices (e.g. $2,635 minus $2,630 = $5 per share). The maximum risk is the amount paid for the spread.
• After entering this trade we allow the position to expire at expiration. For this particular strategy there is no reason to adjust the trade or enter a closing order. Any gain or loss will automatically be cash settled in your brokerage account the day after expiration.
• As evidenced in the chart below, the 200-day MA is the firm support for the S&P 500 Index. You can see the index is continuing to churn higher.
• We are betting the support level holds and S&P 500 Index does not continue falling as quarterly earnings season comes to an end.
• Most of the recent similar trades have been profitable.
• There is a high probability the SPXW call options will settle ITM (in the money) on the June 15th expiration date.
52-Week High: $2872.87
52-Week Low: $2403.59