This SPY Credit Put Spread Targets 25% Return in 22 Days
Bullish play with a target stock price of $559 or above
Strategy has +25% upside potential and 10% overvalued
| Expiration | 01-Nov-24 |
| Buy | 557 Put |
| Sell | 559 Put |
| Credit: | $0.40 |
Option Profit Calculator for SPY Put Spread at 01-Nov-24 Expiration
If SPY stock price at expiration is at or above $559.00, this spread has a 25% upside potential
The optimal stock price for this option strategy is to close at or above $559.00 on the expiration date, November 1, 2024. In that scenario, both puts would expire worthless, allowing you to keep the entire $0.40 you received when selling the spread. That corresponds to a potential +25% return on the amount at risk with 22 days left until expiration.
The maximum gain will be realized if the stock price is at or above 559.00. The maximum gain is $0.40
The breakeven point is at 558.60, which is 1.8% below the current spot price.
The maximum loss will occur when the stock price is at or below 557. The max loss is $1.60.
SPY Spread Current Market Price vs. Historical Average
SPY Put Spread is trading at a 10% premium to historical average.
Using historical data to measure how a similar spread in SPY was priced in the market, the 4-year average value was 0.36, with a high mark of 0.60 and a low of 0.20.
Currently, this vertical put spread is bid at 0.40 and offered at 0.45. The midpoint of the spread is 0.42.
If we use 0.36 as our historical fair value benchmark, the current market bid price is at a 10% premium, while the current market midpoint represents a 17% premium.
| Current Price | Historical Values of Similar Spreads | ||||
| Bid | Ask | Midpoint | Average | High | Low |
| 0.40 | 0.45 | 0.42 | 0.36 | 0.60 | 0.20 |
Takeaway
See how Market Chameleon can help you make smarter and more efficient trades!
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Marketchameleon is a comprehensive financial research and analysis website specializing in stock and options markets. We leverage extensive data, models, and analytics to provide valuable insights into these markets. Our primary goal is to assist traders in identifying potential market developments and assessing potential risks and rewards.
NOTE: Stock and option trading involves risk that may not be suitable for all investors. Examples contained within this report are simulated And may have limitations. Average returns and occurrences are calculated from snapshots of market mid-point prices And were Not actually executed, so they do not reflect actual trades, fees, or execution costs. This report is for informational purposes only, and is not intended to be a recommendation to buy or sell any security. Neither Market Chameleon nor any other party makes warranties regarding results from its usage. Past performance does not guarantee future results. Please consult a financial advisor before executing any trades. You can read more about option risks and characteristics at theocc.com.
The information is provided for informational purposes only and should not be construed as investment advice. All stock price information is provided and transmitted as received from independent third-party data sources. The Information should only be used as a starting point for doing additional independent research in order to allow you to form your own opinion regarding investments and trading strategies. The Company does not guarantee the accuracy, completeness or timeliness of the Information.
