Trade Alert – 2/28/2010

Trade recommendation for 3/1/2010:

Today’s recommendation will offer strikes right at yesterday’s level. We are really looking for two to three down days to add some volatility, which increases option premiums, since there has been a decent market rally in the past couple weeks which has sucked out a lot of the option premium. We at OCM are still recommending to be cautious on downward movement as our economic and technical indicators are still recommending caution for now. 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 and cautious strategy as shown in the following positions:

47 Days Until Expiration:

S&P 500 April 16th Expiration:

SELL April S&P500 850 Puts at 1.05 points
BUY April S&P500 825 Puts at 0.75 points
For a net credit of 0.30 points.

Maximum Potential Gain: $75.00
Maximum Potential Loss: $6,175.00
Maximum Potential Percentage Gain: 1.20%
Maximum Potential Annualized Percentage Gain: 9.32%

61 Days Until Expiration:

S&P 500 April 30th Expiration:

SELL April S&P500 EOM 850 Puts at 1.80 points
BUY April S&P500 EOM 825 Puts at 1.35 points
For a net credit of 0.45 points.

Maximum Potential Gain: $112.50
Maximum Potential Loss: $6,137.50
Maximum Potential Percentage Gain: 1.80%
Maximum Potential Annualized Percentage Gain: 10.77%

82 Days Until Expiration:

S&P 500 May 21st Expiration:

SELL May S&P500 850 Puts at 3.10 points
BUY May S&P500 825 Puts at 2.40 points
For a net credit of 0.70 points.

Maximum Potential Gain: $175.00
Maximum Potential Loss: $6,075.00
Maximum Potential Percentage Gain: 2.80%
Maximum Potential Annualized Percentage Gain: 12.46%

89 Days Until Expiration:

S&P 500 May 31st Expiration:

SELL May S&P500 EOM 850 Puts at 3.65 points
BUY May S&P500 EOM 825 Puts at 2.85 points
For a net credit of 0.80 points.

Maximum Potential Gain: $200.00
Maximum Potential Loss: $6,050.00
Maximum Potential Percentage Gain: 3.20%
Maximum Potential Annualized Percentage Gain: 13.12%