When basic materials and energy spiked on Thursday, I took a bear call spread trade on EEM as it ran up into intermediate term resistance at around $31. SOLD -7 VERTICAL EEM 100 MAR 16 31.5/33.5 CALL @.55.
Breakeven on a call credit spread is the short strike, plus the credit received. So, we'll make a penny or more if EEM stays below $32.55 (short $31.5 strike + $.55 credit) between now and expiration. Chaikin Analytics data supports the trade: price below a downward trending long term Chaikin average, weak money flow and relative strength. The market rollover on Friday made the trade immediately profitable. We'll get out if the spread value decays to $.27.
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