Bullish On SPY? You Might Want To Consider This Credit Put Spread Expiring in 20 Days

What Needs To Happen?

SPY Needs To Remain Above 603

At the time of this writing, SPY was priced at 606.88. To achieve maximum profit from this spread, the stock must maintain a closing price above 603 on the option expiration date of January 10, 2025.

How Much Can You Make?

Max Profit of 0.81 Equates To A 37.0% Potential Return

In such a scenario, both puts would expire worthless, and you would retain the full credit received from selling the spread, which amounts to 0.81. When expressed as a percentage of the amount at risk, this put spread has the potential to yield a return of 37.0% (0.81 credit / 2.19 amount at risk).

What Is The Estimated Win Rate Of This Put Spread?

Estimated Win Rate Of 85%

Historical stock behavior implies that this particular put spread has an estimated success rate of 85%, but there is no guarantee or way of knowing SPY's future performance with certainty.

What Is The Risk?

SPY Stock Could Decline

Since this is a bullish strategy, it carries the risk of a stock decline. In this case, the break-even point on the downside is 602.19.

How Much Can It Lose?

Max Loss of $2.19 On A Stock Decline Below $600

If, at the option's expiration, SPY's price drops below the $600 strike, both put options will be in-the-money, causing the spread to be valued at $3.00 .In such a scenario, the max loss would amount to $2.19, assuming no exercise or assignment risks.

In Summary

What Makes This Opportunity Compelling?

This SPY bull put spread, set to expire on Jan 10, 2025, appears to have a theoretical trading edge and has a potential to generate significant returns while limiting risk.

When Should You Consider This SPY Bull Spread?

It is important to remember that the outcome is uncertain and that the strategy is of a bullish outlook. The stock has to stay above 603 at expiration to fully pay off.
As always keep in mind that all investments carry risk, and success is never guaranteed.

Don't Let an Opportunity Pass You By!

Find More SPY Credit Put Spread Strategies

And if you want to find more credit put spreads for other stocks, go to the bull put spread screener

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