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Our March Trades Are Looking Positive

By Jeff Brown on February 21, 2017

All three of our February credit spreads expired worthless on Friday. That means we get to keep 100% of the premium that we collected when we sold the credit spreads.

We’re on track for all of our March-expiration credit spreads to do the same.

March Spreads

March 2017 $219/$214 bull put spread on the SPDR S&P 500 ETF (SPY)

Last week, the S&P 500 gained 1.5% to reach a new high. That’s great for our bull put spread.

SPY gained an additional $3 last week, which increased our cushion. SPY is about 7% above the short strike price of $219. Rarely has the S&P 500 moved that much in a month. Continue holding this position.

The SPY bull put spread is a HOLD.


March 2017 $125/$120 bull put spread on McKesson (MCK)

McKesson just finished off a great week, rising 7%. There was no news that came out to push the stock higher. Investors just realized the sell-off after earnings a couple of weeks ago was overdone. Remember, we took advantage of volatility in McKesson after the earnings announcement to put on the bull put spread. Now, volatility has dropped and the stock has recovered.

The stock is trading around $150 right now. That’s $25 above the short strike price. This position is looking likely to expire worthless, so we’re moving it to a hold.

The MCK bull put spread is now a HOLD.


March 2017 $62.50/$57.50 bull put spread on American Electric Power (AEP)

AEP has moved strongly during the last few trading days, up from around $62.50 to where it is trading now at around $64.50. This is a positive development for our bull put spread. And, as you can see in the chart below, it has also broken strongly through the 200-day moving average, which will provide strong support for AEP.

We’ll continue to watch this position closely, but as I said, the stock is looking strong. This is great for our position. I’m moving this credit spread to a hold.

The AEP bull put spread is now a HOLD.


March 2017 $42/$47 bear call spread on the SPDR S&P Oil & Gas Exploration & Production ETF (XOP)

West Texas Intermediate crude oil continues to trade in a range with strong resistance at $54. This has been great for our bear call spread on XOP.

It continued trading in its downtrend last week. And the 50-day moving average for XOP is now around $41, which is below our short option strike price of $42. This is positive for our credit spread.

This credit spread is now out of range, so I’m moving this position to a hold as well.

The XOP bear call spread is now a HOLD.

Regards,

Jeff Brown
Editor, Four Point Trader

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