Below is a daily chart of Steel Dynamics, Inc. (STLD), $36.13.
Trade: Sold 10 Apr $39/41 bear call spread (49 DTE) for $400 (Note: announced in Facebook Private Group this morning).
Technical Setup: Major Resistance overhead on daily and weekly charts.
Option Strategy: Bear Call Credit Spread. Defined risk strategy where you make maximum profit (net credit received) if the stock closes below the short call strike at expiration. We sell call strike price above resistance where the pattern suggests that the stock will not close above at expiry, and simultaneously purchase higher strike call than the one sold as a hedge and to reduce margin. The return on investment (ROI) is the credit received divided by the maximum loss (i.e., width of strike prices less premium received). The break even is the lower strike price less credit received (i.e., also your cost basis if assigned the stock). Considered a mildly bearish strategy since we are not buying puts (or shorting stock) and just calling a short-term top in the pattern. Trade has positive theta (meaning you make money on time decay) making it a high probability trade since we time with the technical pattern.
Stop Loss: $38.32.
Below is a daily and weekly chart of Hertz Global Holdings, Inc. (HTZ), $23.45.
Trade: Sold 20 Apr $20/17.5 bull put spread (49 DTE) for $.30/share.
Technical Setup: Bullish consolidation in the upper range of Bullish Wide Range Bar (+WRB) Igniting bar on daily and weekly charts.
Option Strategy: Bull Put Credit Spread. Defined risk strategy where you make maximum profit (net credit received) if the stock closes above the short put strike at expiration. We sell put strike price below support where the pattern suggests that the stock will not close under at expiry, and simultaneously purchase lower strike put than the one sold as a hedge and to reduce margin. The return on investment (ROI) is the credit received divided by the maximum loss (i.e., width of strike prices less premium received). The break even is the higher strike price less credit received (i.e., also your cost basis if assigned the stock). Considered a mildly bullish strategy since we are not buying calls or stock and just calling a short-term bottom in the pattern. Trade has positive theta (meaning you make money on time decay) making it a high probability trade since we time with the technical pattern.
Stop Loss: $19.48.
Adjustments and Comments on Open Advisory Letter Trades
SPWR – Purchased at $7.89. Note: We are going to approach this as a long-term Core holding because of the bullish alignment of multiple time frames; thus, please note that holding over earnings is higher risk. Target: $11.00 – 14.00. Move stop loss to $8.08 to protect gains.
DOW – Sold 10 April $57.5/52.5 bull put spread for $550. Covered half at $.26/share for 50% of Max Gain in a few days with nice move. Closed back half at $.10 for total $370 gain.
JWN – Sold 10 Mar $42.5/37.5 bull put spread for $230. Stop Loss: $42.18.
RH – Sold 10 Apr $25/20 bull put spread for $400. Move stop loss $28.88.
LRCX – We recommend two trades depending on your bullishness. Trade 1: Sold 10 Mar $115/105 bull put spread for $800. Stop Loss: $115.48. Trade 2: Bought 5 Mar $110 calls for $9.15/share, and sold the Mar $120 calls against it for $1.80/share to convert to Bull Call Spread, closed break even.
UA – Sold 10 Apr $20/22.5 bear call spread for $550. Mid-point to close is $.26/share (more than 50% of Max Profit, which is $290 profit now) so move stop loss $19.12 to protect profits and also bid $.15/share to close.
ALK – Sold 10 Apr $95/90 bull put spread for $950. Horrible retracement but maintain stop loss $95.68.
JBLU – Sold 10 Apr $19 naked puts for $400. Stop loss $19.18.
UAL – Sold 10 Mar $78.5/81.5 bear call spread for $.40/share. Mid-point to close is $.25/share ($150 profit) so move stop loss break even.
TLT – Sold 5-lot Apr $123/128 bear call spread for $.57/share and 5-lot for $.53/share for average of $.55/share. Stop Loss: $122.52.
ROST – Sold 10 Apr $70/75 bear call spread for $550. Stop Loss: $69.62.
PCAR – Sold 10 Apr $62.5/55 bull put spread for $520. Stop loss on the put spread is $64.88. Since stock is at Major Resistance and market overbought, sell 10 Apr $70/72.5 bear call spread for $650 or better to convert to Iron Condor. Stop loss on the call spread is $70.32. This will bring in more premium to profit from time decay if PCAR remains range bound.
MRO – Over $16.65, we recommend buying 1,000 shares of stock and selling 10 Apr $18 calls (50 DTE) calls at mid-point (currently $.35 x .37, but will be higher when trade triggered). Note: Earnings 5/17. Stop Loss: $15.18
SBLK- Trade #1: Purchased 1000 shares of SBLK stock at $10.00. Awesome entry. Try to sell Apr $12.5 calls for $.60/share to convert to Covered Call. Trade #2: Sold 10 Apr $10/7.5 bull put spread for $750 (I did not get filled, but okay to try to enter for $.65/share). Note: Earnings 5/24. Move stop loss to break even.
FXA – Sold 5 (half lot) Apr $77/79 bear call spread for $.40/share and 5-lot for $.36/share for average basis of $.38/share. Stop Loss: $77.42.
BA – Trade #1: Sold 10 $187.5/195 bear call spread for $.86/share. Trade #2: Sold 10 $195/210 bear call spread for $.98/share. Stop Loss: $187.22.
CAT – Sold10 Mar $100/105 bear call spread for $.37/share. Mid-point to close now is $.16/share (over 50% of Max Profit in one hour) so let’s close here for quick $210 gain.
SLV – We recommend selling 10 Apr $17.5 naked calls (49 DTE) for $.33/share (closed at $.26 x 37share) or better. Stop Loss: $17.52. No fill, but still valid.
VIAB – We recommend selling 10 Apr $45/47.5 bear call spread (49 DTE) for $.43/share or better. Stop Loss: $45.12.
EL – Sold 10 Apr $87.5/92.5 bear call spread for $.50/share. Stop Loss: $86.12.
AI – Shorted 1,000 shares of the stock at the opening price of $14.43. Stop Loss: $15.12.
EEM – Sold 10 Apr $39/40.5 bear call spread for $.36/share. Stop Loss: $39.22.
NFLX – Trade #1: Sold 10 Mar $145/152.5 bear call spread for $.65/share. Trade #2: Sold 10 Apr $150/170 bear call spread for $2.90/share. Stop Loss: $146.22.
XON – Sold 10 Apr $20/18 bull put spread for $350. Stop Loss: $64.88.
STLD – Sold 10 Apr $39/41 bear call spread for $.40/share (Note: announced in Facebook Private Group). Stop Loss: $38.32.
HTZ – Sold 20 Apr $20/17.5 bull put spread (49 DTE) for $.30/share. (Note: announced in Facebook Private Group). Stop Loss: $19.48.
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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