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Unleaded Gas Bull Put Spread
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Monday Mar 08, 2010
Written by: OpVest, Research Team

Unleaded Gas Bull Put Spread
Current Price: 2.2774
Days till Expiration: 50 days or 04/27/2010

Trade Objective: In our opinion unleaded gas has been trading in an upward trend and we believe that over the next 50 days this market could be above $2.25 a gallon. We also think there could be some supply and demand issues going into April as refineries are changing their blends from winter to summer mixes.

Trade Details:

Sell 1 XRB May 2.25 put for .0972

Buy 1 XRB May 2.23 put for .0886

Profit Potential .0086 or $241.2 after commissions and fees.

The maximum risk on this position is $598.8 after commissions and fees.

The target net on cash is 40.2%.

Greeks
Delta: .0281
Gamma: -0.0292
Theta: -0.06
Vega: -0.45

Trade Management: If this trade were to come under pressure we would roll down and out to a further month contract. We feel there is limited downside potential for gasoline prices so if the market does trade down we wouldn’t be opposed to adding to this position.

Price Chart:



Profit and Loss Graph:

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