Trade Alert – 2/16/2010

Trade recommendation for 2/17/2010:

Today’s recommendation will offer strikes a little higher than last week’s but still cautiously low. The market rally has sucked out a lot of the premium but OCM’s analysis on both economic and technical indicators still shows that investors should be cautious on possible downward movement for the S&P500 in coming months, however, we are starting to see some stability in our economic indicators. Past market environments similar to our current situation have resulted in market movements from -1.0% to just less than -30.00%. Until market indicators begin to show more consistent stability, we recommend taking a conservative strategy at 25% lower than the S&P500 and look to place the following positions.

31 Days Until Expiration:

S&P 500 March 19th Expiration:

SELL March S&P500 875 Puts at 0.80 points
BUY March S&P500 850 Puts at 0.55 points
For a net credit of 0.25 points.

Maximum Potential Gain: $62.50
Maximum Potential Loss: $6,187.50
Maximum Potential Percentage Gain: 1.00%
Maximum Potential Annualized Percentage Gain: 11.77%

43 Days Until Expiration:

S&P 500 March 31st Expiration:

SELL March S&P500 EOM 875 Puts at 1.40 points
BUY March S&P500 EOM 850 Puts at 1.00 points
For a net credit of 0.40 points.

Maximum Potential Gain: $100.00
Maximum Potential Loss: $6,150.00
Maximum Potential Percentage Gain: 1.60%
Maximum Potential Annualized Percentage Gain: 13.58%

59 Days Until Expiration:

S&P 500 April 16th Expiration:

SELL April S&P500 825 Puts at 1.50 points
BUY April S&P500 800 Puts at 1.10 points
For a net credit of 0.40 points.

Maximum Potential Gain: $100.00
Maximum Potential Loss: $6,150.00
Maximum Potential Percentage Gain: 1.60%
Maximum Potential Annualized Percentage Gain: 9.90%

73 Days Until Expiration:

S&P 500 April 30th Expiration:

SELL April S&P500 EOM 825 Puts at 2.15 points
BUY April S&P500 EOM 800 Puts at 1.65 points
For a net credit of 0.50 points.

Maximum Potential Gain: $125.00
Maximum Potential Loss: $6,125.00
Maximum Potential Percentage Gain: 2.00%
Maximum Potential Annualized Percentage Gain: 10.00%

94 Days Until Expiration:

S&P 500 May 21st Expiration:

SELL May S&P500 825 Puts at 3.70 points
BUY May S&P500 800 Puts at 2.85 points
For a net credit of 0.85 points.

Maximum Potential Gain: $212.50
Maximum Potential Loss: $6,037.50
Maximum Potential Percentage Gain: 3.40%
Maximum Potential Annualized Percentage Gain: 13.20%