In this video, I’m going to go through our closing IBB call debit spread that we entered a little while back on IBB which is a biotech ETF. Now right now, the stock is moving higher which is exactly what we wanted with this call debit spread.
I think we did a live trading opening trade video for this one that should be inside of the live-trading section here on Option Alpha. And right now, what we want to do is try to close out this trade because it's reaching close to our profit targets and really, we just want to get this trade-off.
Remember, these debit spreads are directional in nature, so they’re more of a 50-50 trade, so when the stock moves in the right direction early in the cycle, you want to go ahead and take that thing off and bank a profit.
We got into this trade back on 4/4 and today is for 4/21 that we’re doing this video, so if I go to the chart here of IBB, we got into this trade right here on this day which is this day right here. And now you can see the stock has made its move higher.
We want to take advantage of that. We don't want to assume that it’s going to stay higher. It could roll over naturally. And we had initially entered this trade because we needed some bullish exposure in our portfolio. Right now, the spread is trading for 375. We purchased the debit spreads, each of them for 260, so we’re looking at about a $230 profit on it right now if we close it out.
All we’re going to do is just right-click on it, and we’re going to go to create a closing order. That will sell the whole spread for 375. We’re going to try to get filled real quick here at 375 because that’s the price that it’s being offered right now.
We’ll see if we can get this thing filled. We could see some other working orders that we have in here for today. Nothing filled right now, so nothing in our fill column that’s already been placed, but you can see here that we are offering to sell it back at 375.
The market is trading at about 375 as well, so that’s good. It means that we should get filled here pretty quickly if we can. If we look at the actual pricing table here and we scroll down to those contracts, there’s already been some activity today. A couple of contracts gotten filled already today.
Not a lot, but there’s a decent amount of open interest enough definitely for our two spreads to get filled here at some point. We'll pause this video. Hopefully, we get filled here pretty quick on this trade and come back and recap. We’re back here, and it looks like we did get filled later in the day on this IBB position.
It took a little bit more time to get filled at our 375 credit. But at the end of the day, a little bit of patience, a little bit of movement up in IBB and we are out now with a nice $230 I think profit on this trade since the beginning.