New Bear Call Spread Trade in COST
Below is a daily chart of Costco Wholesale Corporation (COST), $161.16.
Trade: We recommend selling 10 Mar 167.5/172.5 bear call spread (21 DTE) for a net credit of $400.
Strategy: Bearish Wide Range Bar (-WRB) breakdown from Major Resistance.
Max Gain: $400 premium received.
ROI: 8.7% in 21 days ($400/$4,600 max loss), with 4% cushion to break even of $167.90.
Max Loss: $4,600, but less with stop posted.
Stop Loss: $165.32
Adjustments and Comments on Open Trades
WIN – Purchased stock at $7.90. Move stop loss to $8.04 to protect a small gain.
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. Stopped at $228.99 for $1.39 swing gain. Nice job.
AMZN – Purchased 5 Feb $775/850 bull put spread (24 DTE) at $42.75/share. Closed at $51 for $8.25 gain. Nice job.
HD – Purchased 10 Feb (24 DTE) $137 calls for $6.90/share. Sold the weekly (2/3) $139 calls for $.80 to bring in premium to reduce cost basis on long call to $6.10/share (i.e., leg into a bull diagonal). Also sold 10 Feb $133/127 bull put spread (24 DTE) for $570. Move stop 136.48 for both positions.
CPLP – Purchased stock between $3.55 and $3.67. Note: holding over 1/31 earnings is higher risk but we like the stock and sector long term. Targets low $5 and $6.25. Stop .loss: $3.14.
TWLO – Sold 10 Feb $26 puts for $700. Stop loss: $29.88.
MOS – Sold 10 March $30 puts for average basis of $650. It had a bearish gap down yesterday and not acting well. We recommend rolling down the March $30 puts to the March $29 puts for $300. Stop loss $29.88.
GPRO – Sold 10 Mar 9/7 bull put spread for a net credit of $550. Stop loss $8.58.
FDX – Sold 10 Feb 185/175 bull put spread for a net credit of $800. Stop loss $187.78. Looking poised for further breakout here (actually, the 15-Min. chart just had a beautiful text book breakout entry), can add bullish positions if like. Here is current daily chart:
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
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Twitter: @GregCapra
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