Ran the screen today

OK I ran the screen today after the markets closed.

It kicked back 121 possibilities, lets start weeding out and using this list. Then I will go back and tell you why I have choosen these criteria for the screener, but first lets start using it.

OK the first thing is to kick out all the ‘n/a’ spreads that show up (one of my dislikes with this screener) I mean hell there is 20 just in the first two pages! Waste of space and time.

Next kick out all the ones that have less than a 10% Return of Risk, unless you want less. Most of the time you will be looking for between 10 and 25% any lower than 10% is not worth the risk for my taste and anymore than 25% is usually too risky for doing this type of credit spread. You might as well go for the in the money out of the money credit spread and make better gains for about the same amount or even lower risk. More on that strategy later.

And lastly weed out anything that has the spread less than 5% away from the current stock price and preferably you would like it to be 10% away. For example lets take a look at the first two that came up ANF and ATI - heres a pic of it…

ANF is shown here at 69.59 around 70 so 5% of that would be 3.5 points away to 7 points away for the 10% difference. So obviously even though the first credit spread of 70/75 has a great 56.25% return it is much too close to provide the lowered conservative risk we would like to see in these trades.

ATI is shown here at 88.36 or a 5% change of about 4.5 points so we are looking for a spread that starts at least over 92.5 which would be 95 in this case so the first one (the 90/95 spread) is out.

So with the first two stock choices we would be looking at the middle spread choices. The ANF 75/80 Spread and the ATI 95/100 spread. Realize these are just starting points nothing else. We would then look at the charts of these; do our technical analysis, look for support and resistance, and run them through the probability chart, before we would place a trade. This is just a screener to choose possible candidates and these may not make the grade.

From this screener after removing the unwanteds we have about 25 to choose from and more likely just under 10 that have any real promise of making it through the rest of the critique.

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