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Tag: Bear Call Spread

Check out Latest Trade Alerts at the bottom. Current week's trade alerts are only available to members.

Take the 2% per week challenge, Trade with us. We only have very few openings for new subscribers and currently offering two weeks of free trial and then special price of $99.95 per month. Sign up for our Trade Alerts and make 2% or more Every Week! Now offering Auto Trading with EOption.

If you are looking for a get rich quick scheme or some service promising 80-100% per trade, please go look somewhere else. Our trades are very conservative with weekly earnings of 1%-5%. We have been trading using this strategy successfully for over 4 years. We started the Beta Testing with a small group of people in October 2011.

With years of experience and extensive research we have developed a system for making consistent profit every week giving us moderate return with low risk. Safety is our No. 1 priority, we don't make any trades if we don't feel they are in safe zone. Our proprietary in-house system provides clear indication of winning trades every week. Regardless of Bull or Bear market, we consistently make 2% and sometimes more every week using our strategy on Options. If you are not familiar with Options, please read Options 101 - How Do Options Work? .

More than 70% of all Options expire worthless, that is the fact. We use this for our benefit to trade Credit Spreads. This involves selling and buying options at different strike price (difference in strike price is called spread) for a net credit. We place such trades when our system indicates very high probability of them expiring worthless allowing us to keep the premium. Read about Bull Put Spread and Bear Call Spread if you are not familiar with Credit Spread Options Strategies.

We have made our Trade Alert Service available to a few new subscribers. We will need to talk to you after you sign-up to understand our compatibility on trading together before we can approve you. This is a limited time opportunity for you to sign up and receive free two weeks trial of our trade alert newsletter. The idea is for you to make enough money during the trial period to be able to pay the monthly trade alerts fee for several months. We are going to accept only a few members. This is serious stuff, we have members making money consistently every week and a few of them are using the strategy with their IRA account as well. We have registered our Newsletter with EOption and are now offering Auto Trading to our members. This will be a great opportunity for folks which can't be in front of computer during trading hours to place the trades. Auto Trading service is a boon for the folks who are constantly travelling or  folks who work in the offices where Trading is not allowed using work computers.

Since October 2011, Our trades only lost money twice (-5.5% and -18.5%). That puts our success rate at 98%. There were two instances during this period where broker closed our position on Friday with $0.01 cutting down our profit by 1%. Once we closed the position  ourselves on Friday for $0.01 cutting down our profit by 1%. Making small but consistent profit is our goal.

In order for you to be eligible to receive and get the best out of our trading alerts, you need to have the following:

  1. Have the basic knowledge of trading Options, understand how they work and the risk associated with that.
  2. Be prepared to trade with $10,000 (at least $5,000). Our current members group has average investment capital of just above $21,000.
  3. Before you place trades using our trade alerts, you will need to have brokerage account with one of the low cost options trading brokers. Since our trades are very conservative with high number of Options contracts, low brokerage fees are necessary for you to generate maximum profit. We recommend EOption. You can take advantage of their wire transfer fee reimbursement offer, for transfer of $10,000 or more they will refund up to $30 in wire transfer fee charged by your bank. We offer Auto Trading Service to our members through EOption. The other option for brokerage account is OptionsHouse. You can take advantage of one of the following offers they have when you open the account. a) Get 100 Commission-Free Trades at OptionsHouse.com! (Requires minimum $5,000 opening balance, our favorite). b) Get a free Kindle Fire from OptionsHouse. (Requires minimum $10,000 opening balance). c) Get a Free Dell Monitor When You Open and Fund an Account at OptionsHouse. (Requires minimum $10,000 opening balance). EOption is cheaper, you don't pay for the bells and whistles you don't use and need. Setting up the ACH with EOption is little tedious and lengthy process (mailing a paper form), that's why some members prefer OptionsHouse. If you are outside USA, EOption is the only option available to you. We have accounts with both OptionsHouse and EOption.

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Track Record - Trade Alert for Past Weeks

Week Ending 6/14/2013 - 1%

Placed on 6/10/2013
Bull Put Spread SPY Exp: 6/14/2013
Buy Put $158, Sell Put $159, Limit Order with Credit $0.02 (2%)

Week Ending 6/7/2013 - 1%

Placed on 6/6/2013
Bull Put Spread SPY Exp: 6/7/2013
Buy Put $156, Sell Put $157, Limit Order with Credit $0.01 (1%)

Week Ending 5/31/2013 - 2%

Placed on 5/28/2013
Bull Put Spread SPY Exp: 5/31/2013
Buy Put $160, Sell Put $161, Limit Order with Credit $0.02 (2%)

Week Ending 5/24/2013 - 2%

Placed on 5/20/2013
Bull Put Spread SPY Exp: 5/24/2013
Buy Put $161, Sell Put $162, Limit Order with Credit $0.02 (2%)

Week Ending 5/18/2013 - 2%

Placed on 5/15/2013
Bull Put Spread SPY Exp: 5/18/2013
Buy Put $160, Sell Put $161, Limit Order with Credit $0.02 (2%)

Week Ending 5/10/2013 - 2%

Placed on 5/9/2013
Bull Put Spread SPY Exp: 5/10/2013
Buy Put $159.5, Sell Put $160.5, Limit Order with Credit $0.02 (2%)

Week Ending 5/3/2013 - 2%

Placed on 4/29/2013
Bull Put Spread SPY Exp: 5/3/2013
Buy Put $153, Sell Put $154, Limit Order with Credit $0.02 (2%)

Week Ending 4/26/2013 - 1%

Placed on 4/25/2013
Bull Put Spread SPY Exp: 4/26/2013
Buy Put $155.5, Sell Put $156.5, Limit Order with Credit $0.01 (1%)

Week Ending 4/20/2013 - 2%

Placed on 4/15/2013
Bull Put Spread SPY Exp: 4/20/2013
Buy Put $150, Sell Put $151, Limit Order with Credit $0.02 (2%)

Week Ending 4/12/2013 - 2%

Placed on 4/10/2013
Bear Call Spread SPY Exp: 4/12/2013
Buy Call $162, Sell Call $161, Limit Order with Credit $0.02 (2%)

Week Ending 4/5/2013 - 2%

Placed on 4/1/2013
Bull Put Spread SPY Exp: 4/5/2013
Buy Put $150, Sell Put $151, Limit Order with Credit $0.02 (2%)

Week Ending 3/28/2013 - 2%

Placed on 3/25/2013
Bull Put Spread SPY Exp: 3/28/2013
Buy Put $148, Sell Put $149, Limit Order with Credit $0.02 (2%)

Week Ending 3/22/2013 - 2%

Placed on 3/20/2013
Bull Put Spread SPY Exp: 3/22/2013
Buy Put $151, Sell Put $152, Limit Order with Credit $0.02 (2%)

Week Ending 3/16/2013 - 2%

Placed on 3/12/2013
Bull Put Spread SPY Exp: 3/16/2013
Buy Put $150.5, Sell Put $151.5, Limit Order with Credit $0.02 (2%)

Week Ending 3/8/2013 - 1.07%

Placed on 3/6/2013
Bull Put Spread SPY Exp: 3/8/2013
Buy Put $150.5, Sell Put $151.5, Limit Order with Credit $0.01 (1.07%)

Week Ending 2/22/2013 - (-18.5%)

Placed on 2/20/2013
Bull Put Spread SPY Exp: 2/22/2013
Buy Put $148.5, Sell Put $149.5, Limit Order with Credit $0.02 (2%) Closed the Trade on 2/21 with 18.5% Loss

Week Ending 2/16/2013 - 2%

Placed on 2/13/2013
Bull Put Spread SPY Exp: 2/16/2013
Buy Put $148.5, Sell Put $149.5, Limit Order with Credit $0.02 (2%)

Week Ending 2/8/2013 - 2%

Placed on 2/4/2013
Bull Put Spread SPY Exp: 2/8/2013
Sell Put $146, Buy Put $145, Limit Order with Credit $0.02 (2%)

Week Ending 2/1/2013 - 2%

Placed on 1/28/2013
Bull Put Spread SPY Exp: 2/1/2013
Sell Put $146, Buy Put $145, Limit Order with Credit $0.02 (2%)

Placed on 1/29/2013 (For new subscribers joining on 1/29)
Bull Put Spread SPY Exp: 2/1/2013
Sell Put $147, Buy Put $146, Limit Order with Credit $0.03 (3%)

Week Ending 1/25/2013 - 2%

Placed on 1/22/2013
Bull Put Spread SPY Exp: 1/25/2013
Sell Put $145, Buy Put $144, Limit Order with Credit $0.02 (2%)

Week Ending 1/19/2013 - 2%

Placed on 1/15/2013
Bull Put Spread SPY Exp: 1/19/2013
Sell Put $143, Buy Put $142, Limit Order with Credit $0.02 (2%)

Week Ending 1/11/2013 - 2%

Placed on 1/8/2013
Bull Put Spread SPY Exp: 1/11/2013
Sell Put $142, Buy Put $141, Limit Order with Credit $0.02 (2%)

Week Ending 1/4/2013 - 2%

Placed on 1/2/2013
Bull Put Spread SPY Exp: 1/4/2013
Sell Put $142, Buy Put $141, Limit Order with Credit $0.02 (2%)

Week Ending 12/28/2012 - 2%

Placed on 12/24/2012
Bull Put Spread SPY Exp: 12/28/2012
Sell Put $137, Buy Put $136, Limit Order with Credit $0.02 (2%)

Week Ending 12/22/2012 - 2%

Placed on 12/18/2012
Bull Put Spread SPY Exp: 12/22/2012
Sell Put $138, Buy Put $137, Limit Order with Credit $0.02 (2%)

Week Ending 12/14/2012 - 2%

Placed on 12/11/2012
Bull Put Spread SPY Exp: 12/14/2012
Sell Put $138.5, Buy Put $137.5, Limit Order with Credit $0.02 (2%)

Week Ending 12/07/2012 - 3%

Placed on 12/04/2012
Bear Call Spread SPY Exp: 12/07/2012
Sell Call $144, Buy Call $145, Limit Order with Credit $0.03 (3%)

Week Ending 11/30/2012 - 2.5%

Placed on 11/26/2012

Bull Put Spread SPY Exp: 11/30/2012
Sell Put $136, Buy Put $135, Limit Order with Credit $0.02 (2%)

Placed on 11/27/2012
Bull Put Spread SPY Exp: 11/30/2012
Sell Put $137.5, Buy Put $136.5, Limit Order with Credit $0.03 (3%)

Week Ending 11/17/2012 - 2%

Placed on 11/14/2012
Bear Call Spread SPY Exp: 11/17/2012
Sell Call $141, Buy Call $142, Limit Order with Credit $0.02 (2%)

Placed on 11/16/2012
Bull Put Spread SPY Exp: 11/17/2012
Sell Put $133, Buy Put $132, Limit Order with Credit $0.02 (2%)

Week Ending 11/9/2012 - 2%

Placed on 11/7/2012
Bull Put Spread SPY Exp: 11/9/2012
Sell Put $136, Buy Put $135, Limit Order with Credit $0.02 (2%)

Week Ending 11/2/2012 - 2%

Placed on 10/31/2012
Bull Put Spread SPY Exp: 11/2/2012
Sell Put $137.5, Buy Put $137, Limit Order with Credit $0.01 (2%)

Placed on 11/1/2012
Bull Put Spread SPY Exp: 11/2/2012
Sell Put $139.5, Buy Put $139, Limit Order with Credit $0.01 (2%)

Week Ending 10/26/2012 - Break

We were on vacation with Beta Tester group celebrating our success.

Week Ending 10/20/2012 - 2%

Placed on 10/15/2012
Bull Put Spread SPY Exp: 10/20/2012
Sell Put $138, Buy Put $137, Limit Order with Credit $0.02 (2%)

Week Ending 10/12/2012 - 5%

Placed on 10/08/2012
Bear Call Spread SPY Exp: 10/12/2012
Sell Call $148, Buy Call $149, Limit Order with Credit $0.05 (5%)

Week Ending 10/05/2012 - 3%

Placed on 10/02/2012
Bear Call Spread SPY Exp: 10/05/2012
Sell Call $147, Buy Call $147.5, Limit Order with Credit $0.02 (4%)

Placed on 10/01/2012
Bull Put Spread SPY Exp: 10/05/2012
Sell Put $139.5, Buy Put $139, Limit Order with Credit $0.01 (2%)

Week Ending 09/28/2012 - 3%

Placed on 09/24/2012
Bear Call Spread SPY Exp: 09/28/2012
Sell Call $148, Buy Call $148.5, Limit Order with Credit $0.02 (4%)

Place on 09/25/2012
Bull Put Spread SPY Exp: 09/28/2012
Sell Put $142, Buy Put $141.5, Limit Order with Credit $0.01 (2%)

Week Ending 09/22/2012 - 5%

Placed on 09/17/2012
Bull Put Spread SPY Exp: 09/22/2012
Sell Put $142.5, Buy Put $142, Limit Order with Credit $0.02 (4%)
50% Filled

Placed on 09/18/2012
For Folks who didn't get the trade filled at all on 09/17/2012
Bull Put Spread SPY Exp: 09/22/2012
Sell Put $143, Buy Put $142.5, Limit Order with Credit $0.02 (4%)

For Folks who got the trade filled partially on 09/18/2012
Bull Put Spread SPY Exp: 09/22/2012
Sell Put $143.5, Buy Put $143, Limit Order with Credit $0.03 (6%)
50% Filled

Week Ending 09/14/2012 - 3%

Placed on 09/10/2012
Bull Put Spread SPY Exp: 09/14/2012
Sell Put $139, Buy Put $138, Limit Order with Credit $0.03 (3%)
100% Filled

Week Ending 09/07/2012 - 3%

Placed on 09/04/2012
Bull Put Spread SPY Exp: 09/07/2012
Sell Put $136, Buy Put $135, Limit Order with Credit $0.03 (3%)
100% Filled

Week Ending 08/31/2012 - 3%

Placed on 08/28/2012
Bull Put Spread SPY Exp: 08/31/2012
Sell Put $138, Buy Put $137, Limit Order with Credit $0.03 (3%)
100% Filled

Week Ending 08/24/2012 - 2%

Placed on 08/23/2012
Bull Put Spread SPY Exp: 08/24/2012
Sell Put $139, Buy Put $138, Limit Order with Credit $0.02 (2%)
100% Filled

Week Ending 08/18/2012 - 5%
Placed on 08/13/2012
Bear Call Spread SPY Exp: 08/18/2012
Sell Call $143, Buy Call $144, Limit Order with Credit $0.05 (5%)
100% Filled

Week Ending 08/10/2012 - 2%
Placed on 08/10/2012
Bear Call Spread SPY Exp: 08/10/2012
Sell Call $141, Buy Call $142, Limit Order with Credit $0.02 (2%)
100% Filled

Week Ending 08/03/2012 - 4%
Placed on 08/02/2012
Bear Call Spread IWM Exp: 08/03/2012
Sell Call $79, Buy Call $80, Limit Order with Credit $0.04 (4%)
100% Filled

Week Ending 07/27/2012 - 5% Average
Placed on 07/26/2012
Bull Put Spread IWM Exp: 07/27/2012
Sell Put $76, Buy Put $75, Limit Order with Credit $0.04 (4%)
50% Filled

Placed on 07/24/2012
Bear Call Spread VXX Exp: 07/27/2012
Sell Call $16, Buy Call $17, Limit Order with Credit $0.06 (6%)
50% Filled

Week Ending 07/21/2012 - 3%
Placed on 07/17/2012
Bear Call Spread IWM Exp: 07/21/2012
Sell Call $82, Buy Call $83, Limit Order with Credit $0.03 (3%)
100% Filled

Week Ending 07/13/2012 - 3%
Placed on 07/10/2012
Bull Put Spread IWM Exp: 07/13/2012
Sell Put $77, Buy Put $76, Limit Order with Credit $0.03 (3%)
100% Filled

Week Ending 07/06/2012 - 4% Average
Placed on 07/03/2012
Bull Put Spread VXX Exp: 07/06/2012
Sell Put $13, Buy Put $12, Limit Order with Credit $0.06 (6%)
50% Filled

Placed on 07/05/2012
Bull Put Spread SPY Exp: 07/06/2012
Sell Put $134, Buy Put $133, Limit Order with Credit $0.02 (2%)
50% Filled

Week Ending 06/29/2012 - 2%
Placed on 06/26/2012
Bull Put Spread SPY Exp: 06/29/2012
Sell Put $127, Buy Put $126, Limit Order with Credit $0.02 (2%)
100% Filled

Week Ending 06/22/2012 - 2%
Placed on 06/21/2012
Bull Put Spread SPY Exp: 06/22/2012
Sell Put $131, Buy Put $130, Limit Order with Credit $0.02 (2%)
50% Filled

Placed on 06/20/2012
Bull Put Spread IWM Exp: 06/22/2012
Sell Put $75, Buy Put $74, Limit Order with Credit $0.02 (2%)
50% Filled

Week Ending 06/16/2012 - 2.5% Average
Placed on 06/14/2012
Bear Call Spread IWM Exp: 06/16/2012
Sell Call $78, Buy Call $79, Limit Order with Credit $0.03 (Net 2%)
50% Filled
Closed By Broker on 06/15/2012 with $0.01 Debit (-1%)

Placed on 06/11/2012
Bull Put Spread SPY Exp: 06/16/2012
Sell Put $125, Buy Put $124, Limit Order with Credit $0.03 (3%)
50% Filled

Week Ending 06/08/2012 - 2%
Placed on 06/07/2012
Bull Put Spread IWM Exp: 06/08/2012
Sell Put $74, Buy Put $73, Limit Order with Credit $0.02 (2%)
50% Filled

If you want to know further track record, Sign up for Free Trade Alerts now and ask us for history.

Disclaimer: Trading involves Risk. Risk of loss in financial instruments like Options, Future and Forex can be substantial and these instruments are not suitable for everyone. Members are encouraged to consider their own financial situation and all the risk factors involved before getting into trading. Past results of our trade alerts, system or any individual trader are not indicative of future returns which may be realized by our members. Please visit Characteristics & Risks of Standardized Options to understand the risk factors.

A bear call spread is a type of vertical spread. It contains two calls with the same expiration but different strikes. The strike price of the short call is below the strike of the long call, which means this strategy will always generate a net cash inflow (net credit) at the outset.

The short call's main purpose is to generate income, whereas the long call simply helps limit the risk from possible assignment.

The profitability of the strategy depends on how much of the initial premium revenue is retained before the strategy is closed out or expires. As the strategy's name suggests, it does best if the stock stays below the lower strike price for the duration of the options.

Still, an unexpected rally should not provoke a crisis: though the maximum gain of this strategy is very limited, so are potential losses.

Outlook

Looking for a steady or declining stock price during the life of the options. As with any limited-time strategy, the investor's long-term forecast for the underlying stock isn't as important, but this is probably not a suitable choice for those who have a bullish outlook past the immediate future. It would require an accurately timed forecast to pinpoint the turning point where a coming short-term dips will turn around and a long term rally will start.

Summary

A bear call spread is a limited-risk-limited-reward strategy, consisting of one short call option and one long call option. This strategy generally profits if the stock price holds steady or declines.

The most it can generate is the net premium received at the outset. If the forecast is wrong and the stock rallies instead, the losses grow only until long call caps the amount.

Motivation

The chance to earn income with limited risk, and/or to profit from a decline in the underlying stock's price.

Max Loss

The maximum loss is limited. The worst that can happen at expiration is for the stock price to be above the higher strike. In that case, the investor will be assigned on the short call, now deep-in-the-money, and will exercise the long call. The simultaneous exercise and assignment will mean selling the stock at the lower strike and buying the stock at the higher strike. The maximum loss is the difference between the two strikes, but it is reduced by the net credit received at the outset.

Max Gain

The maximum gain is limited. The best that can happen at expiration is for the stock to be below both strike prices. In that case, both the short and long call options expire worthless, and the investor pockets the credit received when putting on the position.

Profit/Loss

Both the potential profit and loss for this strategy are very limited and very well-defined. The initial net credit is the most the investor can hope to make with the strategy. Profits at expiration start to erode if the stock is above the lower strike price, and losses reach their maximum if the stock hits the higher strike price. Above the higher strike price, profits from exercising the long call completely offset further losses on the short call.

The way in which the investor selects the two strike prices determines the maximum income potential and maximum risk. By selecting a lower short call strike and/or a higher long call strike, the investor can increase the initial net premium income.

Breakeven

This strategy breaks even at expiration if the stock price is above the lower strike by the amount of the initial credit received. In that case the long call would expire worthless, and the short call's intrinsic value would equal the net credit.

Breakeven = short call strike + net credit received

Volatility

Slight, all other things being equal. Since the strategy involves being short one call and long another with the same expiration, the effects of volatility shifts on the two contracts may offset each other to a large degree.

Note, however, that the stock price can move in such a way that a volatility change would affect one price more than the other.

It is possible that the user may assign different volatilities to each of the strikes if they choose to solve for them.

Time Decay

The passage of time helps the position, though not quite as much as it does a plain short call position. Since the strategy involves being short one call and long another with the same expiration, the effects of time decay on the two contracts may offset each other to a large degree.

Regardless of the theoretical impact of time erosion on the two contracts, it makes sense to think the passage of time would be a positive. This strategy generates net up-front premium income, which represents the most the investor can make on the strategy. If there are to be any claims against it, they must be occur by expiration. As expiration nears, so does the date after which the investor is free of those obligations.

Assignment Risk

Yes. Early assignment, while possible at any time, generally occurs only when the stock goes ex-dividend. Be warned, however, that using the long call to cover the short call assignment will require establishing a short stock position for one business day, due to the delay in receiving assignment notification.

And be aware, any situation where a stock is involved in a restructuring or capitalization event, such as for example a merger, takeover, spin-off or special dividend, could completely upset typical expectations regarding early exercise of options on the stock.

Expiration Risk

Yes. The investor cannot know for sure whether or not they were assigned on the short call until the Monday after expiration. That creates risk. The problem is most acute if the stock was is trading just below, at, or just above the short call strike.

Say, the short call ends up slightly in-the-money, and the investor buys the stock in the market in anticipation of being assigned. If assignment fails to occur, the investor won't discover the unintended net long stock position until the following Monday, and is subject to an adverse move in the stock over the weekend.

There is risk guessing wrong in the other direction, too. This time, assume the investor bets against being assigned. Come Monday, if assignment occurred after all, the investor is unexpectedly short the stock, and its value may have risen in value over the weekend.

Two ways to prepare: close the spread out early, or be prepared for either outcome on Monday. Either way, it's important to monitor the stock, especially over the last day of trading.

Read full detail and check out the Position Simulator at OptionsEducation.org