12.03.08
Second Spread
After closing out my first spread for a profit last month, I set up a second spread on AAPL. Since the stock had fallen a bit, I set up a January 95/100 vertical call spread on Nov 13 with AAPL trading in the low 90’s. My out of pocket expense was $211.50. I now realize that I paid too much to set up this spread and did not have a sufficient safety factor.
After I bought the spread, APPL dropped into the 80’s and stayed there for the rest of November. I had planned to hold the spread until December expiration and sell at a loss if needed. Fortunately, I got lucky. AAPL rose to $96 today and I was able to close out the spread with a small profit of $27.00 for a gain of 12% in 21 days.