Thursday, March 8, 2012

$TNA trade set up

Here is the TNA trade setup. I only risk money that I can afford to lose.
My thesis is that from these levels small caps have more upside potential than downside risk.
Even then, i am choosing a relatively conservative level: looking to sell April credit put spread at $44/41 (selling the 44 put and buying the 41 put behind it to limit my loss potential). Probability for maximum profit is over 80% and the max loss is $3 (dollars at risk). The reward/risk ratio is a little lower than i usually like but for this fast runner i am choosing lower reward/risk to get into a strike further out from current price. this limits the chance of incident. If I can't get the trade done at my price, i may move the spread closer to price but not too close. i am willing to walk away from the trade.