BABA Bear spread jan 30 112/113

UPDATE JAN 30 2015,

Trade outcome: Successful. Should have let it ride to the end. Ended up closing the short strike. Profited $7 (53% of max profit).

Original Strategy:
1) Lay out implied volatility lines
2) wait for movement to IV levels
3) initiate credit spread in that direction that is 1 or more std away and outside a support/resistance area.


What worked:
1) Used IV levels that were OTM and approximately 1.5 to 2 std away from mean.
2) When the IV ranges was first calculated, you see the price moved up from a lower price point to the current price. This is a signal to do a spread in that direction.

Contingent plan:
1) If BABA broke past 112.12, the next 1 STD strike levels would be used to do a credit spread.
2) Attempt to initiate a bull put spread to convert it into an IC. This would allow to maximize ROC.