SPY/QQQ - Feb.'18 Vertical Spread Pairs Trade (SPY side)
Trade details for SPY:
261/258 Put Vertical Credit Spread @ $0.37
Prob. of Max Profit = 79.79%
Prob. of Max Loss = 12.62%
Break-even @ $260.63
52 D.T.E.
Trade plan:
QQQ identified to be overbought + sign of weakness compared to recent rally.
SPY & QQQ are highly correlating, with QQQ as more volatile mover (suitable for debit spread).
Feb. expiration has sufficient premium for credit spread + room for adjustment during trade if needed
Built credit spread in SPY + Built debit spread in QQQ
For SPY credit spread:
Expecting SPY to expire worthless IF market rallies with no consolidation + $37 profit will lower QQQ max loss ($293) by 12% before any QQQ adjustments
Max risk ($263) in SPY is possible with strong market plunge, BUT QQQ profits will cover that sufficiently in that case.
Check QQQ side of pairs trade for more information.
261/258 Put Vertical Credit Spread @ $0.37
Prob. of Max Profit = 79.79%
Prob. of Max Loss = 12.62%
Break-even @ $260.63
52 D.T.E.
Trade plan:
QQQ identified to be overbought + sign of weakness compared to recent rally.
SPY & QQQ are highly correlating, with QQQ as more volatile mover (suitable for debit spread).
Feb. expiration has sufficient premium for credit spread + room for adjustment during trade if needed
Built credit spread in SPY + Built debit spread in QQQ
For SPY credit spread:
Expecting SPY to expire worthless IF market rallies with no consolidation + $37 profit will lower QQQ max loss ($293) by 12% before any QQQ adjustments
Max risk ($263) in SPY is possible with strong market plunge, BUT QQQ profits will cover that sufficiently in that case.
Check QQQ side of pairs trade for more information.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.