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Related Symbols: RTH
Think we’ve seen the top in retail stocks for the next two months? Then this April bear call spread on the Retail HOLDRs ETF (NYSE: RTH) offers a nice risk/reward opportunity. Selling the spread for $1.40 could return as much as 39% in 56 days versus the maximum risk of $3.60. The 52-week high in the RTH is $96.25 and the ETF has recently recovered its 50-day moving average just above $93, but sideways trading between $90 and $95 could persist in the short-term as the broad market continues to consolidate.
RTH Credit Spread Trade Details:
The RTH is currently trading at $94.08, up about 0.15% today.
Credit Spread/Bear Call Spread –
A free virtual trading account from OptionsHouse offers, among other tools, a probability calculator that helps project the likelihood of success for this trade.
Profit/Loss Details:
Maximum Profit: $1.40 (the credit collected). This excludes commissions, though exit commissions will not be required if both calls expire worthless.
Maximum Risk: $3.60 (the difference between strikes minus the credit collected). Reward on risk is approximately 17% in 29 days.
Breakeven: $96.40 (the strike of the lower call plus the premium collected).
For more on the RTH:
Trading the Retail Sector on Cyber Monday
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