Today we have added a 1×2 put spread in CEG. We had a simple short put through last month’s cycle. This position has the potential to end up owning 100 shares of stock.
Buy to open: CEG May 15th (monthly) 260.00 strike put (ratio of 1)
Sell to open: CEG May 15th (monthly) 230.00 strike put (ratio of 2)
Debit: 2.45
Probable risk = 2.45 or $245.00 per spread
Max risk = owning 100 shares at 202.45/share at May expiration (that is a $20,245 potential investment)
Max reward = 27.55 or $2,755.00 per spread