This was a very short term credit spread. The idea is to take advantage of a stock’s momentum in a particular direction and then take a very short term trade taking advantage of that. I like to stay in these trades 2 days or less if possible. You could trade these over 5 days but every day increases your risk.
I opened this credit spread in AAPL late Wednesday with an expiration for Friday end of day. I had support at the 21 and 50 day moving average as well as the bottom bollinger band. AAPL was trading right at the VWAP line when I entered.
I was in the trade for 2 days and made $110.00 while risking $1890.00. The return was 5.82%. The biggest problem with these trades is you have to be able to actively manage them. They are more likely to go against you quickly than some of my other trades.
These are not for the faint of heart.