AAL - Weekly Call Credit Spread (This Coming Week)

A credit spread is a two-option strategy that results in an initial credit to the trader. It can be used in both a bullish and bearish market depending on the configuration.

Symbol: AAL
Current Price: $44.91
Short Option
Write (Sell)
Option: 1st June $45.00 Put
Price per option: $ 0.77
Contracts #6 x 100 (600 shares)
Total cost: $77
Long Option
Buy
Option: 1st June $45.00 Put
Price per option: 0.11
Contracts: #6 x 100
Total cost: $66
Entry cost $398 (next credit, in account now)
Maximum risk: 1104 at a price of $42.50 at expiry
Maximum return: $396 at a price of $45 or higher
Breakevens at expiry: $44.33