Zero Cost Basis Trade…
By: Steve Smith
Yesterday, my inbox exploded with questions about a triple roll trade in SPY that we entered in Options360 on Monday, and I explained in detail yesterday.
I’m not going to dig into the trade again, I gave you an in-depth breakdown already, but I do want to address some common questions about it.
What amazed people so much about the trade is that it looks like, by next week, we will be able to exit the trade on a zero-cost basis.
That means ANYTHING we sell the position for will be profit.
Even if the original position is down when we sell it will be profitable. (No guarantees – but that is how it is looking right now.)
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Here’s how that works…
We entered a longer-term trade and immediately started selling short-term call options against the original position. Because there are 3 expiration dates per week, we’ve been able to sell 2 short-term positions against the underlying longer-term trade.
Again, I explained all of this in-depth yesterday.
At this point it appears, no guarantees, that we will be able to collect enough premium by Wednesday of next week to completely offset the cost of the longer-term trade…
Making the original trade FREE!
That means as long as the underlying position is not worthless when we exit, we will have a winning trade…
Even if the underlying trade is selling for less than we originally purchased it for.
I am looking for more trades like this because the strategy is a particularly strong strategy in this market – with the wild intraday swings we are seeing.
If you want to jump on board and take advantage of this kind of “zero-cost basis trades,” I suggest you grab your $19 trial subscription to Options360 right now!
To Your Success,