Trade Details & Summary

XBI Call Debit Spread (LIVE Closing Trade)

Got lucky picking the exact bottom for our entry in this call debit spread for the XBI biotech ETF which ultimately was closed for a profit of $165 today on the rally higher.


More Discussion

Was This Helpful? Add Comments/Questions

Show Video Transcript +

In today's video, we’re going to try to get out of our position in XBI. This is a call debit spread that we entered into a little while back here, and we were trying to play a move higher in XBI, hedge some of the other things that we had in our portfolio.

And we saw a move higher in XBI as the market rallied up. And now, we’re starting to see a little bit of a pullback in that stock, and I think it’s just run its course. We played the move higher. That’s exactly what we got. I don’t remember actually when we got into the trade.

We can look here and see. We got in this trade on 5/13. We bought three of the $2 wide call debit spreads for $1.5 each. We got back in this trade like I said on 5/13, so if we go here to the chart, you can see that 5/13 is basically the bottom of this trend which is actually kind of cool.

I did not know that we got into it for that exact amount. We picked the bottom here, not exactly what we intended on doing, just a lucky pick, but we had a nice move higher in the stock, volatility didn't do us any favors, but we still have hopefully a nice little gain here in XBI.

What we’re going to do here is just try to close out this position. It’s already reached our profit target of about 150/155. If we close it out right now at 160, we should make about $165 on the trade, so we’re going to go ahead and just try to get this thing filled at 160 right away, get that order right into the market and start working.

It should maybe take a little bit of time to fill. I’m not sure. The market is not insanely liquid right now for XBI and it’s trading right at our mark, so it's just a matter of finding another pair or trader out there who wants to take the other side of this trade and get this trade-off.

We’re trying to close it out at 160, entered this trade order here at 9:42, so shortly after the market opened and right now, it’s trading at like I said, 160. If I go in here and just look and see where the options are, I wonder how much volume and open interest there is.

There is a little bit of activity here today which is good. These are deep in the money options now, so it actually worked in our favor. It looks like somebody else has already traded a nice big block of 19 contracts, so we have to find someone who's willing to trade some of this right now.

And there isn’t too much activity across the board in these options right now. Like I said, the market just opened, and you can see there hasn’t been a lot of volume on the put side, very little volume on the call side.

This is one of those instances where you have just to let the position work here a little bit at your price and be patient to get out when somebody comes in and wants to get the other side of the trade. What we’re going to do here is just pause this video.

We’ll come back when we get this thing filled and take a look at it. Alright, we’re back. It didn't take too long here, just a couple of minutes for our order to get filled in XBI. We did get filled at the 160 credit.

A little bit of patience and waiting was good, but we are now out of XBI and have a nice little profit. As always, hopefully, these live trading videos help you. If you have any questions or comments, please ask them in the comment section right below. And until next time, happy trading!

eBook Download

The "Ultimate" Options Guide

Ultimate Options Strategy Guide

The step-by-step guide on how to set up each of the top 18+ options strategies we trade to generate monthly income. Read the whole strategy guide in less than 30 mins and have it forever to reference.

Download PDF

Join More Than 47,345 Members

Membership is always free & you can upgrade anytime to unlock our live trades.