$100 OIH Credit Spread Profit in 6 Days

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Call credit spread: In this video, we’re just going to go quickly over the one closing trade that we did have today in OIH. We were able to buyback this spread. We tried to do it yesterday but didn’t get filled in the order. And we're a little bit more aggressive than just the 50% profit just because oil has been moving down lower.

But we were able to close out this spread, all five of our vertical call credit spreads for a $10 debit. It means we took a nice $100 profit. And honestly, we’ve only been in this trade for about five days. We sold this thing back on the 23rd, and now today would be the fifth or sixth day here, six days that we’ve been in this trade, so a quick trade.

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All we were trying to do is just take advantage of the continued downward movement in OIH. Implied volatility stayed the same. It has gone up a little bit, but where we made the money on this one is with the drop in the stock price and the fact that we’ve gotten just a little bit closer to expiration since we traded those front October contracts.

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I’ll be honest in saying that I think OIH is setting up to be another play, potentially playing it towards the bullish direction, but out in November. Since we have earnings coming up starting tomorrow, we’ve got a lot of things that we can trade around earnings with high implied volatility; there’s going to be very few opportunities to trade some of these ETFs that have high implied volatility.

And I think OIH is going to be one of those opportunities that we can play now towards the other side of the market, selling maybe a put spread below the market or a naked put or something like that. Obviously, we’ll keep everyone updated with any new trades that we roll out here in the next couple of days.

Alright, if you guys have any other questions, please let me know. Until next time, happy trading!

About The Author

Kirk Du Plessis

Kirk founded Option Alpha in early 2007 and currently serves as the Head Trader. In 2018, Option Alpha hit the Inc. 500 list at #215 as one of the fastest growing private companies in the US. Formerly an Investment Banker in the Mergers and Acquisitions Group for Deutsche Bank in New York and REIT Analyst for BB&T Capital Markets in Washington D.C., he's a Full-time Options Trader and Real Estate Investor. He's been interviewed on dozens of investing websites/podcasts and he's been seen in Barron’s Magazine, SmartMoney, and various other financial publications. Kirk currently lives in Pennsylvania (USA) with his beautiful wife and three children.