Update: This trade expired for max profit of $720. And this post is now available to the public.
As expected, the market hit over 2070ES – our target and spent time in the 2060s today.
We initiated a new trade this morning – a bearish call spread.
My target was just over 2070 ES — and we hit early Monday morning before the market opened. From there, it started drifting down. I was hoping for just one more thrust during the market hours , but I saw enough patterns in place for this 5th wave to be complete.
Given the price action drifting lower – I executed a bear call spread when ES was at 2065.
Short 15 April 08 Call strike 208
Buy 15 APril 08 Call strike 211
These 15 contracts of the credit spread resulted in a net credit of $.50 each option. Since each contract is for 100 options, that $.50 translates to $50 potential max profit for each contract. For 15 contracts, that’s 15 * $50 = $750 less commissions and we get a max profit of $720.
Risk (Max Loss): $4,284 (amount of margin required)
Reward (Max Profit): $720.
Return on Capital @ Max Profit = ~18% in one week
What We Are Looking For
As long as ES stays below 2078 (SPY 208), then we will collect the maximum profit of $720. Our breakeven is slightly above those levels.
The screenshot is taken from the Interactive Brokers platform, but you can use any platform.
What I highlighted in red is how you see your risk reward ratio.
In this case, we are risking $4,284 to make $720 maximum profit. Max profit would then be calculated as $720 / $4284 = ~ 18% return in 1 week.
Here is the alert I sent out:
We executed this credit spread at -$.50. The screenshot above was taken after the close — showing an est. Combo Premium of -0.25. So already we’ve reached 50% of max profit on this trade. Meaning of the $720 max profit, we are already at $360. Let’s see how it plays out.