Wednesday, March 21, 2012

$EQIX trade w/87% max profit probability


I successfully did this trade in Mar and i am putting it on again here.
$EQIX popped sharply in mar and i sold 155/60 credit call spread that expired worthless for max profit.
Today eqix popped on news on someone taking 6% stake in it. so i will do the same trade over:
sell april 160/65 credit call spread for abt .4 to .45. Again, this is not huge money but it's a car payment.
I will have a 9.5%buffer in price to strike.
and 87% chance of max profit. The only thing that doesn't thrill me (but not a deal breaker for me here) is the reward/risk ratio=.09 (risk $1 to make .09).
Usually i try to stay over .15.

If i don't get the execution i might turn this into an iron condor 130/25 - 160/65.
It will pay me $.8 Reward/risk=.19; probability of max profit is abt 76%
I would have a 10% price to strikes pad which is decent.


As with any trade there are risks but in this case the I am very comfortable with the dollars at risk. I always try to know and manage my risk; I ask 'what will I lose if the crap hit the fan in the worst possible way.' If I know the answer to this and am ok with it then I should be ok.

THIS IS NOT A RECOMMENDATION OF ANY KIND. I ONLY INVEST MONEY I CAN AFFORD TO LOSE.