Below is a weekly chart of First Majestic Silver Corp. (AG), $9.43.
Trade: Over $9.65, we recommend buying 10 April 7 calls (80 DTE) for and selling the Feb 10 calls at the mid-point (currently $2.95/share). This trade is called a bullish diagonal. The intent is to profit from the longer term ITM calls while reducing our cost basis by selling closer OTM calls to reduce our cost basis. This trade alert is good until cancelled since it will be bullish when triggers. Note: Holding over earnings is higher risk.
Strategy: Anticipated breakout daily and weekly charts, with bullish reverse head and shoulders pattern weekly and bullish engulfing monthly with price void above.
Max Loss: Debit paid.
Stop Loss: $8.48.
Adjustments and Comments on Open Trades
WIN – Purchased stock at $7.90. Move stop loss to $8.04 to protect a small gain.
SALT – Sold 10 Jun $5 puts for a net credit of $500. Maintain stop loss at $5.48. Because spreads widened, place GTC limit to close at $.10/share for 80% max profit.
HD – Purchased 10 Feb $137 calls for $6.90/share. Sold the weekly (2/3) $139 calls for $.80 to bring in premium to reduce cost basis on long call to $6.10/share (i.e., leg into a bull diagonal). Also sold 10 Feb $133/127 bull put spread for $570. Move stop 136.48 for both positions.
CPLP – Purchased stock $3.63. Note: Holding over 1/31 earnings is higher risk but we like the stock and sector long term. Targets low $5 and $6.25. Stop loss is $3.14.
TWLO – Sold 10 Feb $26 puts for $700. Stop loss is $29.88.
MOS – Sold 10 March $30 puts for average basis of $650. It had a bearish gap down after entry and not acting well. We rolled down the March $30 puts to the March $29 puts for $300 (lowering our maximum gain on the trade to $350). Stop loss is $29.88.
GPRO – Sold 10 Mar 9/7 bull put spread for a net credit of $550. Nice explosive move yesterday, move stop loss $9.78.
FDX – Sold 10 Feb 185/175 bull put spread for a net credit of $800. Move stop loss under $190. Stopped out at $1,400 for a loss of $600.
COST – Sold 10 Feb 167.5/172.5 bear call spread for a net credit of $400. Stop loss $165.32.
ANF -We recommend buying 10 May 14 puts (80 DTE) for $3.15/share or better (closed at $3.05 x 3.20). We are going a few months out of this since all time frames suggest lower prices. We will plan on converting into a bearish diagonal after a sell off by selling the Feb OTM puts. Second trade on ANF was to sell 10 Feb 12/13 bear call spread (19 DTE) for a net credit of $170 or better. NOTE: Stock gapped down on desired entry day and we did not get filled on either trade. Cancel for now.
NM – We recommend buying the stock over Friday’s high of $2.06. Did not trigger. Deep retracement now so cancel trade.
NFLX – Shorted 10 Feb 136/130 bull put spread (18 DTE) for a net credit of $1,200. Stop loss $136.88.
AAL – We recommend selling 10 Feb 50 naked calls (19 DTE) for a net credit of $400 or better on a bounce. NOTE: Stock gapped down on desired entry day and we did not get filled for the limit. Cancel for now.
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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