*****UPDATE***** 5/14THE DELTAS ON THE JCP SPREAD ARE NOW BOTH AT 1.00 EACH.

SINCE IT IS ALMOST A NEAR CERTAINTY THAT JCP WILL NOT BE ABOVE 32 BY FRIDAY THE SPREAD IS AT FULL VALUE AND WILL SIMPLY LET THE SPREADS EXPIRE AT FULL VALUE.

TOTAL GAINS UPON EXPIRY WILL BE THE MAX GAIN POSSIBLE

SPREAD DIFFERENCE OF 3.00 – COST OF 1.15 = 1.85 OR $185 PER CONTRACT SPREAD A 161% GAIN. 1.85 / 1.15= 161% GAIN

*****UPDATE***** 5/14 AFTER CLOSE

THE ORDER FILLED TODAY @1.15 DEBIT

MAX GAIN POSSIBLE IS SPREAD DIFFERENCE OF 3.00 – COST OF 1.15 = 1.85 OR $185 PER CONTRACT SPREAD A 161% GAIN. 1.85 / 1.15= 161%

MAX LOSS POSSIBLE IS THE COST OF THE SPREAD 1.15 OR $115 PER CONTRACT SPREAD

MY TRADE EXIT TARGET IS TO HAVE JCP BELOW 32 WEDNESDAY MORNING ON BAD EARNINGS, WITH A GTC ORDER SELL TO CLOSE @2.70 OR MORE.

IF THE 2.70 SELL TO CLOSE HITS WEDNESDAY MORNING, IT WILL HAVE BEEN A 235% GAIN, ON A TWO DAY TRADE.

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*****UPDATE***** 11:07AM 5/14

ORDER IN FOR 35-32 MAY19 JCP DEBIT PUT SPREAD @1.15DEBIT

Order Details

Leg Action Contracts Option Description Price Duration
Leg 1 Buy to Open 6 JCP Put JCP May 19 2012 35.00 Put Debit 1.15 Day Order
Leg 2 Sell to Open 6 JCP Put JCP May 19 2012 32.00 Put
Est. Trade Value: $690.00
Est. Commission: $10.75
Estimated Fee: $0.32
Funds required for this trade: $701.07

Quote JCP   34.38   0.05 Bid 34.38 Ask 34.40 Volume 2,721,058
JCP MAY 19 2012 35.00 PUT
JCP MAY 19 2012 32.00 PUT
Bid 2.00 0.83
Ask 2.07 0.89
Last 2.30 0.95
Change 0.26 [12.75%] 0.10 [11.76%]
Volume 50 768
Delta -0.63 -0.08
Open Int 7,509 15,331
Desc JCP May 19 2012 35.00 Put JCP May 19 2012 32.00 Put
Net Quote
Bid
1.11debit
Mid
1.18debit
Ask (natural)
1.24debit
*********************************************************************

My wife loves to shop, matter of fact which wife doesn’t? Anyway her mother is retired and works at JC Penney’s part time. All the mother in law could say today was how bad business has been at JCP lately. She said layoffs have been rampant within her store, sales dropping off dramatically, and also quote “I never thought I would see one of my favorite stores be in such trouble.”

I kind of had an idea that was going on there, and their new “Simple” campaign, never hooked anyone one I’ve talked to as of yet either. I feel we are setting up for a massive disappoint on Earnings AH Tuesday, and a great short opportunity here, IMHO.

However you play it short, is up to you. But for the exotic spread players out there, looking for a few good ideas on what to maybe post what the play will be tomorrow. I will give proper credit for the idea provider, but just sooo late tonight, and been tending to so many other things tonight, tired now.

Creditspread23

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