Today I established a Bullish Seagull position on QQQ. Here's the analysis using Thinkorswim (TOS).
This Bullish Seagull (Short Put + Long Call + Short Call) position has two possible outcomes as follows:
Minimum profit if all options are OTM at expiration (i.e above the short put and below the long call).
| Stock | Strikes | ExpDate | Days | ProbOTM | Margin | P/L | ROI | AROI |
|---|---|---|---|---|---|---|---|---|
| QQQ | 258/272/274 | 8/28/2020 | 16 | 78% | $25,800.00 | $102.97 | 0.40% | 9.10% |
Maximum profit if both call options are ITM at expiration (i.e above the short call).
| Stock | Strikes | ExpDate | Days | ProbITM | Margin | P/L | ROI | AROI |
|---|---|---|---|---|---|---|---|---|
| QQQ | 258/272/274 | 8/28/2020 | 16 | 43% | $25,800.00 | $302.97 | 1.17% | 26.79% |
The following chart show QQQ in a solid uptrend. I've drawn price lines at the short put and short call levels. Any price above the short call ($274) will result in max profit, and any price below the short put ($258) will result in the min profit.
The risk graph shows the profit zones, upper and lower strikes, and breakeven level. Above are probabilities of being within those areas. The vertical line is the Aug 28 expiration.
The risk graph shows the profit zones, upper and lower strikes, and breakeven level. At the top are the probabilities of being within those ranges (22.03% below $258, 34.97% between $258 and $274, and 42.99% being above $274). As you can see, it's also a lopsided seagull, with more room between strikes to the downside, where all the risk is. This is by design.
I hope this has been helpful.
