Selling EOM July call spread on S & P 500 futures

On Friday we stated that "We are looking for the market to possibly continue its rise for another 1% to 2 %. We will look to sell the end of month call spreads on the July contract within the next few days."

The market opened higher today, July 21, 2008 and traded up to 1268 but seemed to lose steam, and headed south down to 1255. At the close the market climbed back up around 1261.

We recommend selling the 1310 - 1330 call spread for 1.2 points or $300, less commission and fees. The spread is 4% out of the money, and we feel will not be reached within the next 10 days. Margin on the position is less than $3500 and maximum risk is 18.8 points or $4700 plus commission and fees. (1330 - 1310 = 20 points -1.2 premium collected = 18.8 points.)

We would look to risk $600 on the position. Return on risk would be 6.3% in 10 days if options expire worthless.
To discuss setting up a monthly S&P Income generating program for you, give us a call.
Stephen Zielinski
Mercury Capital Management, LLC
Website http://www.mercury-capital-management.com


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