Below is a daily/weekly chart of Jabil Circuit, Inc. (JBL), $29.22.
Trade: We recommend shorting 10 Jun $27/23 bull put spread (57 DTE) for mid-point (currently $.45/share).
Technical Setup: Breakout daily and weekly after Breakdown Failure, strong (but extended) monthly.
Option Strategy: Bull Put Credit Spread (BPS). 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 entry with the technical pattern.
Max Gain: Credit received. Cost basis if assigned is higher strike minus Credit.
Stop Loss: $27.88.
Adjustments and Comments on Open Advisory Letter Trades (Note: We have started posting our trade updates in a separate Report in the Member’s Area. Please see that document for a current reflection on all Open and Closed Trades which will be updated nightly). But here are the current Adjustments.
NFLX – Sold 10 May (weekly 5/5) $150/155 bear call spread under 10-Min. low for $.48/share. Closed half at $.22/share for over 50% Max Gain in one day and move stop loss $141.62, and bid $.10/share for back half.
TLT – Sold 10 May $119/114 bull put spread for $.59/share. Close half at $.23/share and stopped half at $.34/share for $200 gain.
QQQ –Sold 10 May 134/138 bear call spread for $.71/share. Stopped at $.99/share for $280 loss.
LOW – Sold 10 May 85/90 bear call spread for $.32/share. Stopped at $.69/share for $380 loss.
CSX – Cancel trade because of bullish gap.
XLK – Cancel, too strong.
HST – Did not trigger over 5-Min. high, cancel trade because of morning weakness.
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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