Below is a monthly chart of Marathon Oil Corporation (MRO), $16.45.
Trade: 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.
Technical Setup: See monthly chart but pull back into Bullish Wide Range Bar after bottoming pattern. We will look to sell shorter-term calls against it over time (i.e., Bullish Diagonal) to reduce cost basis.
Option Strategy: Covered Call. Defined as Long Stock + Short Call (1 contract for every 100 shares). Premium received lowers cost basis because selling Extrinsic Value (time decay). Done to take in money (Premium) which increases probability of profit. Since capping gains, considered a Mildly Bullish directional trade.
Target: $25 area.
Max Loss: Debit
Stop Loss: $15.18.
Below is a daily chart of Star Bulk Carriers Corp. (SBLK), $10.22.
Trade: We recommend this morning in the Master Trader Private Facebook Group to buy SBLK stock at $10.00.
Trade #2: We recommend selling 10 Apr $10/7.5 bull put spread (50 DTE) for $750 (current mid-point). Note: Earnings 5/24.
Technical Setup: Breakout daily and weekly charts with huge price Void monthly chart from bottoming pattern.
Option Strategy: Two bullish plays.
Target: Open.
Max Loss: Debit
Stop Loss: $7.88.
Below is a daily chart of CurrencyShares Australian Dollar ETF (FXA), $75.85.
Trade: We recommend selling 5 (half lot) Apr $77/79 bear call spread (50 DTE) for current mid-price of $.40/share or better. Can add the back half for $.60/share (on possible bounce; otherwise, can add 5-lot tomorrow under today’s low).
Technical Setup: Bearish gap under topping pattern daily with Major Resistance weekly 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.
Stop Loss: $77.42.
ANF Gap Play.
Note that we posted in the Master Trader Private Facebook Group this morning a bullish trade (long stock or short puts) after a few minutes of trading on Pro Gap.
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. Had great move so move stop loss to $7.89.
SWKS – Sold 10 Mar $90/85 bull put spread for $450. Mid-point to close is $.23/share for 50% of Max Gain so move stop loss break even.
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. For back half, bid to close at $.10 and move stop loss to break even.
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. Stop Loss: $24.88.
LRCX – We recommend two trades depending on your bullishness. Trade 1: Sold 10 Mar $115/105 bull put spread for $800. Trade 2: Bought 5 Mar $110 calls for $9.15/share. For the Long Call, sold the Mar $120 calls against it for $1.80/share to convert to Bull Call Spread and lowering cost basis to $7.35/share. Closing with breakout, looks good. Stop Loss: $115.48.
UA – Sold 10 Apr $20/22.5 bear call spread for $550. Move stop loss $19.42.
SALT – Sold 10 Jun $5 puts for a net credit of $500. Quote now is $.20 x .40 so move stop to break even and place GTC limit to close at $.10/share for 80% max profit.
GPRO – Sold 10 Apr $8/6 bull put spread for $330. Stop Loss: $8.68.
HUM – Sold 10 Apr $195/185 bull put spread for $1,450. Nice breakout and market getting extended so bid $.95/share to close for $500 profit, trail stop under prior day’s low to protect profits.
HLF – No fill yet on selling 10 Apr $65/75 bear call spread for $.85/share. Stop Loss: $63.22. Not filled yet so cancel for now.
IYT -Sell10 Apr $162/159 bull put spread (51 DTE) for $500 (current mid-point). Stop Loss: $166.88. Not filled yet so cancel for now, too spready.
ALK – Sold 10 Apr $95/90 bull put spread for $950. Stop Loss: $95.68.
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: $64.88.
Group Membership Meeting for Market and Trade Review
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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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