Below is a daily/weekly chart of United Continental Holdings, Inc. (UAL), $72.85.
Trade #1: We recommend selling 10 Apr $79/82.5 bear call spread (38 DTE) for around $.53/share.
Trade #2: We recommend selling 10 Mar $77/80 bear call spread (10 DTE) for $.29/share.
Technical Setup: Major Resistance overhead on daily and weekly charts, and Climactic Sell Setup with multiple Topping Tails on the monthly.
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.
Stop Loss: $77.42.
Adjustments and Comments on Open Advisory Letter Trades
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.
ALK – Sold 10 Apr $95/90 bull put spread for $950. Stopped at $1.60/share for loss of $650.
JBLU – Sold 10 Apr $19 naked puts for $400. Stop loss $19.18.
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. Move stop break even.
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 – 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. Move stop loss $85.22.
AI – Shorted 1,000 shares of the stock at the opening price of $14.43. Move stop loss $14.43.
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: $19.88.
STLD – Sold 10 Apr $39/41 bear call spread for $.40/share. Move stop loss: $37.22.
HTZ – Sold 20 Apr $20/17.5 bull put spread (49 DTE) for $600. Stop Loss: $19.48.
KBH – We recommend purchasing 10 Jul $15 calls (136 DTE) and selling the Apr 19 calls (45 DTE) for a net debit of $2.85/share or better. Note: Holding over earnings (4/12) is higher risk. Stop Loss: $15.88.
HOG – Sold10 Apr $55 naked puts at $.93/share. Stop Loss: $55.48.
KORS- Sold 10 Apr $40 naked calls for $.40/share. Stop Loss: Note: If trades over $39, we recommend buying the stock to convert to a Covered Call.
UA – Bought 10 Apr $22.5 puts for $4.25/share. Stop Loss: $19.12.
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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