Unprofitable: This trade is unprofitable if SPPI closes under $12.60 by April 20, 2012. The most this spread can be worth is $1 minus the $0.40 I sold it for, so my maximum loss is $0.60. I am risking $60 per 1 lot to make $40 on this spread.
Reason I Like This Trade: When SPPI was trading $13.05, I saw someone sell 5047 SPPI April 9 Puts for $0.8-. This is very bullish activity, so I wanted to get LONG the DNDN. I wanted to make a goof risk vs reward trade, so I thought this was a great way to play SPPI to the upside. In Our “LIVE” Trading room talked about this trade in real-time, but have to be in the room to hear to LIVE.
UPDATE 3.15.2012 I saw a customer sell more April 13 Puts in SPPI, so I was offering more of these Put Spreads for $.40, but I have not got filled yet.
UPDATE 3.22.2012 With the stock trading right arounf $13, this Put Spread is still worth $.35, but time is still on my side.
UPDATE 4.9.2012 I am glad I sold Put Spreads instead of just Puts. This stock has gotten hammered and is currently $10.50. I defined my risk vs reward and realized that the spread could go to $1, so I am moving on to the next trade.
UPDATE 4.23.2012 This Spread expired worth the whole value, $1, won’t be trading $SPPI anytime soon, moving to the next trade.
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