S&P 500 Index (SPX) Weekly Income Trade

By Gregory Clay of The Option Player

Option Trading Strategist & Financial Writer • Oct 20, 2016 at 10:13 AM EDT

S&P 500 index is set up for a low risk weekly income trade. Over the past few months the S&P 500 index (SPX) has fluctuated in a relatively narrow trading range.

Theoptionplayer.com sets up S&P 500 Index (SPX) short-term (8-day) option strategy. Investors could simultaneously:

Sell the October week-four expiration SPX $2115 put for $6.10 (Wednesday’s closing quoted bid/ask mean)
AND
Buy the $2110 put at $5.60

The difference between funds received and paid out is a $.50 per share credit which we keep if the S&P 500 index closes above $2115 on Friday October 28th but immediately exit the position if it appears the price will end up lower. If the price gaps lower open the trade using lower strike prices.

Why we recommend it:

As seen in the daily chart below, over the past few months the S&P 500 index (SPX) has fluctuated in a relatively narrow trading range. The S&P 500 index appears to be setting up for a recovery bounce off the bottom of the trading range. There is a high probability the S&P 500 index will continue to trade above the target price for another week, especially as earning season progresses.

52-Week High: $2190.15
52-Week Low: $1828.08

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