technical reasons - there seems to be a recover in price by rallying past previous low, and after completing corrective legs
fundamental - Goldman Sachs have a BUY rating with target of $14.95 over 12 months ( +37%)
good probability of this credit spread- with 5 weeks until expiry there is 'time-decay' on side
Here is an example of a 'paper trade' that went wrong - and trying to roll the strike down; to recover loss
and lose only brokerage.
initial entry - June 22 Bull put spread with Sold 12.19 July 15 / buy 11.76 - for net credit $700 at around underlying of 13.00
Roll down position of options to avoid being exercised at expiry ( as European sold leg)
Options trade - Bull Put Spread
technical - seems like a two legged correction in a weak bullish trend of equal amounts has indicated a pause in price ;
The at the money put at 16.50 is sold for credit for Aug 20th expirey;
The out of money put at 15.50 is bought for debit
net credit $1000
1. If > 16.50 at expires keep money
2. if between 15.50 &...
This is similar concept to ORI trade, but just reversed by placing a Bear call spread ( credit)-
taking advantage of time decay the last 14 days until options expiry.
short 32.00 July 15 / long 33.00 July 15 - for net credit $ 610.
There is a technical termination of C wave in textbook correction,
so to be neutral to bullish seems a better than 50% chance.
Using time-decay last 14 days of Bull Put spread;
short 16.00 Jul 15 strike / long 15.50 Jul - for net credit payment of +$639 for 2 weeks wait....
Just needs to expire > 16.00 to be 'out of the money' for a win here.
I think the financial sector has topped out for now and with a potential leg C in an ABC correction,
I could have 3 weeks of this price remaining under the sold portion @ 124 strike ( european)
10 ( 1000 shares) bear credit spread strikes -124 / +126 yields a tidy $780 before costs for 3 weeks time until 15 July.....
I think with the slightly over-cooked sell-off into an area with high volume trading activity should be price
stabilize. This is a strong company with good projected income potential over the next few years. If I was forced to buy it via exercised then I could live with that.
In the meantime - I can pick up a credit at close to 'at-the money' and see what...
This is based on ' The Anty' strategy in which after a normal correction degree, there is at least the same or better recovery in price - a neutral to bullish strategy is bull put spread ( paid a credit) and with only 8 days until expiry benefit from time-decay at a fairly high probability scenario....it needs to close below 10.98 at expiry ( using european style...
The Consumer discretionary sector is correcting in a Bull leg - it has done 'normal' correction so far in length and time;
SO looking at a stronger leading stock in the sector - we have a similar action.
As this places a slightly higher probability of the stock at least holding 'above' support zones below - a neutral to bullish options credit spread can take...
Would I like to own IAG for a premium price?
If I can pick it up for 5.50 that's historically a better than fair price in past months.
However - that's only if the credit leg of options gets exercised in two weeks until expiry = plan B.
Plan A _ book a net credit on Bull Put spread, with protection ( insurance) 1 strike below at 5.25 ( -0.25c)
Thanks for viewing,
I'll give my technical and fundamental view briefly;
- After the sharp drop from February highs AMEX has under-performed the market - dipping ~51%,
- This compares to an over 80% drop in 2009,
- The dip was followed by the formation of a rising wedge, which normally indicates continuation of the trend preceding the pattern (which...
Aside from this, I am wishing everyone good health. Crazy times we live in.
Directional Play: Just trying to flatten my delta in $SPX. I will look to manage these trades independently.
Technical: Above 50% retracement, below 161.8% projection.
Directional Play: Dynamic short delta play. Capitalizing on high IV. Will look to the put side if the opportunity presents itself.
Technical: Above 61.8% retracement.
Fundamental: Fed cut rates; consumer fundamentals in a good place; goods trade deficit contracted; manufacturing business outlook recently rose to it's highest levels, but virus and...
Directional Play: Short delta. Long-term I think gold could go higher, but it seems extended here and IV is high.
Technical: Above 261.8% extension.
Fundamental: Fed just made an emergency cut; spending sees loss in momentum, but consumer fundamentals in a good place; goods trade deficit contracted; manufacturing business outlook recently rose to...
Directional Play: Yes, establishing long delta position to reduce short delta and margin.
Technical: Below October low.
Take profit? 50% of credit received.
Where will you hedge? $1410
Short and Long leg: $1410, $1395
Short Leg Delta: 0.16
Expiration: March 6
This is a page where I look to share...
What a sell-off! Here is a quick summary of how I was able to turn a sizeable loser into a winner.
Trade 1: Opening Credit Put Spread $1.10CR To Establish Dynamically Long Position
Short Leg: 2020-02-20 Sold 1 RUT 03/06/20 Put 1595.00 @ 3.75
Long Leg: 2020-02-20 Bought 1 RUT 03/06/20 Put 1575.00 @ 2.65
Trade 2: Opening Credit Call Spread $2.20CR To Reduce...
Description: Initiating a long delta position in $RUT via a credit spread.
- Directional Play: Yes, adding long delta and improving my theta/vega numbers with this short duration, high IV play.
- Technical: Below 20 and 50 moving averages. We finally saw what markets crashing down looks like (again); in the /ES we took out a VPOC and currently...