Vertical Spread Example (Credit Spread): 

 

Sell SLVSM            July 2009    $13 Put             $1.20

Buy SLVSL            July 2009     $12 Put             $0.80

 

Net Premium               $0.40 (-Trading Costs)

 

Maximum Loss            $0.60 ($1 difference in strikes – $0.40 premium received) (+Trading Costs)

 

Maximum Gain            $0.40 (-Trading Costs)

 

SLV is trading for        $13.61 at the close on Friday 03/20/09

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