December 12, 2013 Trade Alert - Terry’s Trades Portfolio

This might be an interesting way to take advantage of the high put prices that exist because of the dividend payable to holders of the stock next week.  If the stock falls as it should after going ex-dividend, the 177 put spread should move much higher (an at-the-money put with 4 weeks of remaining life should be  selling well over $2).  On the other hand, if the stock moves higher we shouldn’t have to be concerned about the 179 call being exercised because it expires a week after the dividend is payable.

BTO 5 SPY Jan-14 177 puts (SPY140118P177)
STO 5 SPY Dec-13 177 puts (SPY131221P177) for a debit of $1.29  (buying a calendar)

BTO 5 SPY Jan-14 179 calls (SPY140118C179)
STO 5 SPY Dec4-13 179 calls (SPY131227C179) for a debit of $.91  (buying a calendar)
 
Be prepared to change these price limits by $.05 or more in order to get an execution.
 
Happy trading.
 
Terry