Break-even: I break-even on this trade if AIG closes at $30.76 by May 18, 2012.
Unprofitable: I lose money on this trade if AIG closes under $30.76 by May 18, 2012. The most I can lose on this trade is the amount the Spread can be worth $1 minus the Price I sold it for $.24 for a total of $.76
Reason I Like This Trade: AIG has been very strong this year and the only reason it is selling off today is because the government announced it will be selling $5 billion in stock. It has had a nice pop off the $30.50 low and I think it can hold that level. In this strategy, I make money if AIG rallies, is flat, or even sells off a little bit.
UPDATE 5.8.2012 Even though the stock has not sold off with the stock market, this Spread is currently worth the same price, $.24. With time on my side, I will leave this trade on.
UPDATE 5.9.2012 With AIG looking strong even during the sell-offs, this Spread is worth $.23, but I will try to capture ful value and watch to expire worthless.
UPDATE 5.10.2012 With AIG rallying today by more than $.40, this Put Spread is now worth $.12, good for a double. I will try to squeeze every penny out of it and watch it go to zero
UPDATE 5.11.2012 Time is on my side and AIG should close above $31, so I will leave this trade on.
UPDATE 5.14.2012 AIG is selling off today, but the stock is still holding the $31 level. With 4 days left after today, I think the selling could be over for the stock market and AIG.
UPDATE 5.15.2012 This trade gave me a little sweat this morning as the stock sold off under $31. I will monitor this trade, but unless I think the stock market is headed way lower, I will leave this trade on until expiration.
UPDATE 5.16.2012 As long as AIG closes above $31 on Friday, I do not have to worry about this position and as long as it stays above $30.76 this trade will be a winner.
UPDATE 5.22.2012 Just because a trade is a loser, doesnt mean it was not a good trade. I still think this trade was a good risk vs reward, but expired worth $1, but it worked out better than being LONG the stock.