Below is a daily/weekly chart of The PNC Financial Services Group, Inc. (PNC), $126.10.
Trade: We recommend selling 10 Apr $135/140 bear call spread (42 DTE) for around $.50/share (current mid-point). Note: Close before 4/18 earnings.
Technical Setup: Breakdown daily after failed breakout, extend weekly, and climactic sell setup monthly chart.
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 breakeven 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.
Max Gain: Credit received. Cushion of 7.5% to break even of $135.50.
Stop Loss: $132.22.
Below is daily/ weekly chars of Actuant Corporation (ATU), $28.02.
Trade: We recommend buying 1,000 shares of stock around $28.80 – 28.85 on a slight pull back. If not trigger, then buy over today’s high on Monday.
Technical Setup: Bullish Wide Range Bar (+WRB) breakout on the daily and weekly charts.
Target: $29.50 – 30.00.
Stop Loss: $26.28.
Adjustments and Comments on Open Advisory Letter Trades
JWN – Sold 10 Mar $42.5/37.5 bull put spread for $230. Mid-point to close is $.16/share so move stop 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. Nice gap down, move stop loss $119.52 to protect gains.
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. Stopped at $67.18 for $.50/share (break even). 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. This will bring in more premium to profit from time decay if PCAR remains range bound. Stopped 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. Mid-point to close is $.23/share. Bid $.05/share to close as looks lower, move stop loss $75.72.
BA – Trade #1: Sold 10 Mar $187.5/195 bear call spread for $.86/share. Mid-point to close is $.12/share so let’s close for $.14/share to book $720. Trade #2: Sold 10 Apr $195/210 bear call spread for $.98/share. Mid-point to close is $.38/share so close half for $.60/share and move stop break even for back half.
VIAB – Sold 10 Apr $45/47.5 bear call spread $.43/share. Stop Loss: $45.12.
EL – Sold 10 Apr $87.5/92.5 bear call spread for $.50/share. Closed $.25/share for $250 profit.
AI – Shorted 1,000 shares of the stock at $14.43. Trail stop over prior day’s high to book gains.
EEM – Sold 10 Apr $39/40.5 bear call spread for $.36/share. Move stop loss $38.52.
NFLX – Trade #1: Sold 10 Mar $145/152.5 bear call spread for $.65/share. Mid-point to close is $.43/share so move stop break even. Trade #2: Sold 10 Apr $150/170 bear call spread for $2.90/share. Mid-point to close is $2.51/share so move stop break even.
XON – Sold 10 Apr $20/18 bull put spread for $350. Acting fine but spreads widened, bid $.15/share to close. Stop Loss: $19.88.
HTZ – Sold 20 Apr $20/17.5 bull put spread for $600. Move stop loss to $20.48.
KBH – Purchased 10 Jul $15 calls (136 DTE) and sold the Apr 19 calls (45 DTE) for a net debit of $2.95/share. Note: Holding over earnings (4/12) is higher risk. Stop Loss: $15.88.
HOG – Sold10 Apr $55 naked puts at $.93/share. Closed $.46/share for $470 gain.
UA – Bought 10 Apr $22.5 puts for $4.25/share. Sold Mar $17.5 puts for .25/share to convert to Bear Diagonal and lower cost basis to $4.00/share. Move stop loss $18.42 (which will still be small profit because of put sold).
UAL – Trade #1: Sold 10 Apr (weekly 4/13) $79/82.5 bear call spread for $530. Mid-point to close is $.36/share so move stop break even. Trade #2: Sold 10 Mar $77/80 bear call spread for $270. Mid-point to close is $.09/share. Looks lower so bid $.05/share to close and move stop break even.
GPI – Sold 10 Apr $85/90 bear call spread $.47/share. Stop Loss: $83.22.
CSX – Sold 10 Apr $50/55 bear call spread for $.88/share. Note: Close before 4/18 earnings. Stop Loss: $50.32.
NMM – Purchased 2,000 shares of stock at $2.25. Stop Loss: $1.84.
SQ – We recommend buying 1,000 shares of stock over $17.20 as swing trade. Target: $17.90+. Did not trigger. Cancel trade since market internals questionable now.
WFT – Sold 10 Apr $6 naked puts spread for $.19/share. Stop Loss: None for now since bullish long term.
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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