Below is a daily/weekly chart of Chesapeake Energy Corporation (CHK), $5.45.
Trade: Over 43.59, we recommend shorting 10 Jun $5 naked puts (38 DTE) (currently $.16 x .17/share). Note: this is huge ROI (Premium/Margin).
Technical Setup: Huge bullish Double Bottom on daily and weekly charts.
Option Strategy:
Short Naked Puts (SP). Similar to bull put spread except not buying the lower strike put. We sell put strike price below support where the pattern suggests that the stock will not close under at expiry. In exchange for the premium received, the put seller has the obligation to buy the underlying stock at the strike price on or before expiry.
The Max Gain is the Premium received, which is realized if the stock closes above the short put strike at expiration. The return on investment (ROI) is the credit received divided by the margin required to hold the position. The break-even is the short 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 short strike minus Credit.
Stop Loss: $4.98.
Below is a daily/weekly chart of Duke Energy Corporation (DUK), $82.88.
Trade: Over $83.15, we recommend shorting 10 Jun $80 naked puts (38 DTE) for a limit of $60/share.
Technical Setup: Breakout on daily and weekly charts if triggers.
Option Strategy: Short Naked Puts (SP). Similar to bull put spread except not buying the lower strike put. We sell put strike price below support where the pattern suggests that the stock will not close under at expiry. In exchange for the premium received, the put seller has the obligation to buy the underlying stock at the strike price on or before expiry.
The Max Gain is the Premium received, which is realized if the stock closes above the short put strike at expiration. The return on investment (ROI) is the credit received divided by the margin required to hold the position. The break-even is the short 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 short strike minus Credit.
Stop Loss: $81.78.
Adjustments and Comments on Open Advisory Letter Trades (Note: Our Trade Updates are timely posted in a separate Report in the Member’s Area. Please see that document for a current reflection on all Open and Closed Trades since the spreadsheet updates immediately and will always be more current than this e-mail update. Thank you.
But here are the current Open Trades and Adjustments.
EIX – Shorted 1000 shares of stock at $78.74. Sold 10 May 77.5 puts for .40/share to convert to a covered put and improve basis to $79.14/share. Move stop loss to $80.22.
SPY – Bought 10 May 235/241 bull call spread for $4.10/share. Sell half for $1.00/share gain. Move stop loss break even and trail stop under a prior day’s low.
XOM – Shorted 10 May $80/75 bull put spread for $.55/share. Stop Loss: $80.18.
EBAY – Under $33.09 (5-Min. low since our rules require that for triggers that hit within the first five minutes), we recommend shorting 10 Jun 34/36 bear call spread (38 DTE) for mid-point (closed at $.47/share). Stop Loss: $34.32.
THERE WILL BE A MEETING THIS COMING THURSDAY AT 4:15. IT WILL BE RECORDED. EVEN IF YOU CANNOT ATTEND, REGISTER AND THE LINK TO THE RECORDING WILL BE SENT.
https://attendee.gotowebinar.com/rt/5129252912438774530
Master Trader Monthly Advisory Review and Discussion
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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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NOTE: Master Trader will show all trades assuming a 1,000 position for stock, or a 10-lot for options (which represent 1,000 shares of the underlying). However, this is not a recommendation on proper share size for your particular trading style, risk tolerance, or account balance. We urge you to calculate your own share size based on your individualized risk parameters, Trading Plan, and familiarity with the proposed trade.
NOTE: Master Trader and its representatives might have existing positions in these and other trade recommendations before or after suggested herein. Additionally, we often manage them differently for internal purposes based on different risk parameters than noted herein.
