Below is a weekly chart of CF (CF Industries), $27.28.
Trade: We are recommending selling 10 Dec 22.5 puts naked for a limit of $.15/share (trading at $.14 x .17). Since the hourly chart is extended, on a hopeful retracement, add two more lots: one for a limit of $.20/share and for a limit of $.25/share to average in.
Strategy: Break out daily and weekly, and extended and bottoming on the monthly.
Max Gain: Credit received which is realized if the stock closes above the short strike by expiration.
Max Loss: If assigned, will have a cost basis of $22.35
Breakeven: $22.35 (short strike price less premium received).
Stop Loss: None for now.
Watch List
Bull put spread candidates – RIG, CRC, ARCH, POT, MU.
Adjustments and Comments on Open Trades
DG – Shorted 10 Nov $65/60 bull put spread for $.70/share. With DG trading substantially above the short strike, should expire worthless for full profit.
M – Shorted 10 Nov $34/30 bull put spread at $.60. With M trading substantially above the short strike, should expire worthless for full profit.
CVI – Shorted 10 Nov $15/12.5 bull put spread for $.85/share. With CVI trading substantially above the short strike, should expire worthless for full profit.
FSLR – Shorted 10 Nov $35 puts for $.58. Acting poorly after earnings so will likely get assigned. Prior to expiry Friday afternoon, we recommend selling the Dec 32.5 calls (currently trading $1.60 x 1.80) to convert the position into a covered call upon assignment.
FB – Shorted 10 Nov $120/115 bull put spread for a limit of $.53/share, plus shorted 10 Nov 115 puts naked for $.50/share. The short 115 puts should expire worthless if closes over $115; if not, we suggest rolling them to the Dec $110 puts (currently bid $1.07/share). The short Nov $120/115 bull put spread will likely expire in-the-money; as such, we recommend rolling it to the Dec $115/110 put spread (currently for a total net debit of $1.22/share).
GPRO – Shorted 10 Nov $14/10 bull put spread on GoPro Inc. for $.76/share. Acting poorly after earnings so will likely get assigned if closes between strikes. If assigned, we recommend selling the Dec $10 calls for $.52 to reduce basis; if closes below $10 and gets assigned, will let it go.
Happy trading! If you have any questions or comments, please e-mail Greg Capra at Greg@mastertrader.com or Dan Gibby at Dan@mastertrader.com
All the best,
Greg Capra
Founder of The Pristine Method of Trading
Follow me on Twitter and StockTwits to get real-time updates:
Twitter: @GregCapra
Stocktwits: @Greg_Capra
