prvtrader 11:33 am on Thursday, March 3, 2016

SPY Diagonal

Apr 1 SPY 192 Call / Mar 18 SPY 202 Call for a $7.13 Dbt.

Bobbie 11:58 am on Thursday, March 3, 2016

Does this SPY diagonal call trade have to remain between 192 & 202 to be profitable?
- prvtrader 1:15 pm on Thursday, March 3, 2016
  
  No
  it has no upside risk whatsoever. Max profit will occur at 202, but there will be profits even if the market goes to 400.
  If I am 100% wrong the max loss will be the debit paid; however, once the short option’s premium drops to 80% of its value, I will roll it to the following week to collect more premium and reduce the total cost and therefore the max loss.
  This position is similar to a Covered Call…except that it uses options instead of long shares.
  - Bobbie 5:32 am on Friday, March 4, 2016
    
    Thank you so much for that explanation , prvtrader!

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