You are enjoying two weeks Master Trader’s new Weekly Options Trader!
It is designed for the active trader wanting to generate weekly income from high probability short-term option selling.
Because of the ease of the strategy and statistical “edge” that exists in selling options around Master Trader’s compelling chart patterns, these trades are available in all market environments – trending, choppy, or even a volatile mess.
Below is a daily chart of Netflix, Inc. (NFLX), $171.78.
Trade: Consider shorting Sep (9/8) $165/155 bull put spread (8 Days to Expiration (DTE)) for around current mid-point of $.62/share or better since extended intra-day.
Technical Setup: Breakout from multi-week consolidation with Bullish Wide Range Bar (+WRB) engulfing bar yesterday, and Buy Setup on Minor Support weekly chart.
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.
Return: 6.6% ROI if expires worthless over $165 short strike ($.62/$9.38).
Stop Loss: $166.38.
Below is a link to individual videos explaining in greater detail the definitions of the main option trading strategies used in the Master Trader Option Strategies Series for Investors and Active Traders to generate wealth and income.
Description of Master Trader Directional and Income Option Trades can be seen HERE
Sign up for the Master Trader Weekly Options Trader here.
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 of Master Trader
Pristine’s Founder and Creator of the Pristine Method
Dan Gibby
Chief Options Strategist
Follow Greg on Twitter, YouTube, and StockTwits to get real-time updates and education:
Twitter: @GregCapra
Stocktwits: Greg_Capra
youtube.com/c/mastertrader (please subscribe to receive all the timely stock market updates)
