First week of August 2010.
Looking for income plays in a sideways market.
SPY rose this past week to 113 in low volume. Its above the 200 day sma and the 20month ema which is bullish but its in a rising wedge pattern on low volume which is bearish. The MACD is rising. The ADX is declining.
VIX is low around 22. Falling VIX = rising stocks but if its at an extreme (under 25) then it signals a possible top. Wait for crossover confirmation.
Put/Call ratio is sitting above the .60 range.
Entered in (5) Aug10 115/116 Bear Call Spread for a credit of .31.
Imp prob 115 - 20%
Imp prob 116 - 19%
Risk is spread - credit or 100 - 31 = 69
69 x 5 contracts = 345
Probability exp 115 27.32%
Probability exp 116 19.79%
Profit is limited to $155
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