Put Selling Candidates Into Earnings
Below is a daily chart of The Mosaic Company (MOS), $33.72
Trade: We recommend selling 10 March $30 puts (51 DTE) (half currently around .60/share and half at $.70/share on a possible retracement in the stock). Note: holding over earnings is higher risk but we like the stock long term.
Strategy: Bullish Wide Range Bar (+WRB) breakout on daily and weekly charts in strong fertilizer/commodity sector. Note: also watch MON and POT.
Max Gain: Credit received of $650.
Max Loss: Cost basis will be $29.40 if assigned.
Stop Loss: $29.88.
Below is a daily chart of Twilio Inc. (TWLO), $30.21.
Trade: We recommend selling 10 Feb $26 puts (23 DTE) at $.70/share or better. Note: holding over earnings is higher risk but we like the bottoming pattern and reward-risk.
Strategy: Breakout on daily chart after false breakdown, and climactic buy setup on major support on monthly chart.
Max Gain: Credit received of $700.
Max Loss: Cost basis will be $25.30 if assigned.
Stop Loss: $25.88.
Adjustments and Comments on Open Trades
WIN – Purchased stock at $7.90. Move stop loss to break even.
SALT – Sold 10 Jun $5 puts for a net credit of $500. Maintain stop loss at $5.48. Because spreads widened, place GTC limit to close at $.10/share for 80% max profit.
SPY – Purchased at $227.60. Nice move today. Target on half is $231. Move stop loss break even.
AMZN – Purchased 5 Feb $775/850 bull put spread (24 DTE) at $42.75/share. Nice move today, place limit sell for half for 10-point gain. Move stop break even.
HD – We recommend two bullish trades: (1) buy 10 Feb (24 DTE) $137 calls for $6.90/share; and (b) selling 10 Feb $133/127 bull put spread (24 DTE) for $.57/share). On the long call, under $1139.20, we recommend selling the weekly $140 calls (currently $.73 while HD is at $138.58) to bring in premium to reduce cost basis and leg into a bull diagonal. Move stop 136.48.
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
Managing Director and Pristine Founder
Dan Gibby
Chief Options Strategist
Follow Greg on Twitter and StockTwits to get real-time updates:
Twitter: @GregCapra
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