This SPY Credit Call Spread Aims for 52% ROI in 3 Days
Bearish play with a target stock price of $501 or below
Strategy has +52% upside potential and 12% overvalued
| Expiration | 30-Apr-24 |
| Buy | 504 Call |
| Sell | 501 Call |
| Credit: | $1.02 |
Option Profit Calculator for SPY Call Spread at 30-Apr-24 Expiration
If SPY stock price at expiration is at or below $501.00, this spread has a 52% upside potential
The optimal stock price for this option strategy is to close at or below $501.00 on the expiration date, April 30, 2024. In that scenario, both calls would expire worthless, allowing you to keep the entire $1.02 you received when selling the spread. That corresponds to a potential +52% return on the amount at risk with 3 days left until expiration.
The maximum gain will be realized if the stock price is at or below 501.00. The maximum gain is $1.02
The breakeven point is at 502.02, which is 0.8% above the current spot price.
The maximum loss will occur when the stock price is at or above 504. The max loss is $1.98.
SPY Spread Current Market Price vs. Historical Average
SPY Call Spread is trading at a 12% 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 0.91, with a high mark of 1.32 and a low of 0.50.
Currently, this vertical call spread is bid at 1.02 and offered at 1.10. The midpoint of the spread is 1.06.
If we use 0.91 as our historical fair value benchmark, the current market bid price is at a 12% premium, while the current market midpoint represents a 16% premium.
| Current Price | Historical Values of Similar Spreads | ||||
| Bid | Ask | Midpoint | Average | High | Low |
| 1.02 | 1.10 | 1.06 | 0.91 | 1.32 | 0.50 |
Takeaway
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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.
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