Closed out October put spread

We mentioned that we would be closing out the October 850 – 825 put spread on the S&P futures if the value got to 4.5 points. Yesterday we closed out this position.

Selling put spreads on S & P 500 Futures for October

The end of month September options expired worthless on September 30, 2008.

The S&P index has dropped over 18 percent since September 29th 2008. Although we do not think we are finished to the downside overall, we do feel that a rebound is becoming more likely and that we are oversold in the short term. Currently the S&P December futures are trading around 980. We are looking at selling the S&P October 850 put and buying the S&P October 825 put to limit our risk on the trade for a credit of 2.5 points or $625 less commission and fees. This position is 13% out of the money and expires in 10 days. We are looking at support around the 950 level.

Risk on the trade is 22.5 points (850-825 =25 minus 2.5 of collected premium = 22.5.) or $5625 maximum risk plus commission and fees. We would look to close out the position if it gets to 4.5 points in value.
To discuss setting up a monthly S&P Income generating program for you, give us a call.
908-787-2089
Stephen Zielinski
Mercury Capital Management, LLC


Website http://www.mercury-capital-management.com/
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