Below is a weekly/monthly chart of VanEck Vectors Oil Services ETF (OIH), $30.72.
Trade: If is trading over $30.40 into the close, we recommend selling 10 Apr $29/27 bull put spread (37 Days to Expiration (DTE)) for mid-point (currently $.30/share).
Technical Setup: Buy Setup with Bottoming Tail on weekly and monthly charts.
Option Strategy: Bull Put Credit Spread. 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 with the technical pattern.
Stop Loss: $29.28.
Below is a daily/weekly chart of United States Steel Corporation (X), $36.35.
Trade: Over $36.50 (after 3:30 ET into the close), we recommend selling 10 Apr $30/26 bull put spread (37 DTE) for a minimum of $.25/share (currently $.27/share).
Technical Setup: Consolidation on Minor Support daily with pull back to r20MA on weekly chart.
Option Strategy: Bull Put Credit Spread.
Stop Loss: $34.28.
Adjustments and Comments on Open Advisory Letter Trades
ROST – Sold 10 Apr $70/75 bear call spread for $550. Mid-point to close is $.43/share, move stop loss break even.
BA – Closed both Trade #1 and #2 for a total of $1,280 gain, and was left with a “free” long Apr $210 call since there was no premium left, try to sell at $.25/share.
VIAB – Sold 10 Apr $45/47.5 bear call spread $.43/share. Move stop loss $44.72.
KBH – Purchased 10 Jul $15 calls (136 DTE) and sold the Apr 19 calls (45 DTE) for a net debit of $2.95/share. Note: Holding over earnings (4/12) is higher risk. Stop Loss: $15.88.
UA – Bought 10 Apr $22.5 puts for $4.25/share. Sold Mar $17.5 puts for .25/share to convert to Bear Diagonal and lower cost basis to $4.00/share. Move stop loss $18.22 (which now locks in trailing profit because of put sold and stock falling).
GPI – Sold 10 Apr $85/90 bear call spread $.47/share. Bid $.25/share to close and move stop loss breakeven.
CSX – Sold 10 Apr $50/55 bear call spread for $.88/share. Note: Close before 4/18 earnings. Stop Loss: $50.32.
NMM – Purchased 2,000 shares of stock at $2.25. Sold 1,000 shares at $2.60/share for $350 gain. Other 1,000 shares stopped break even.
WFT – Sold 10 Apr $6 naked puts spread for $.19/share. Stop Loss: None for now since bullish long term.
PNC – Sold10 Apr $135/140 bear call spread for $500. Note: Close before 4/18 earnings. Stop Loss: $132.22.
QQQ – Bought 10 Mar $129 calls for $2.63/share. Stop Loss: Trail under prior day’s low since quick swing trade.
SMH – Sold10 Apr $75/70 bull put spread for $.57/share. Stop Loss: $75.48.
JCOM – Sold 10 Apr $80/75 bull put spread for $.70/share. Stop Loss: $80.88.
MTB – Sold 10 Apr $175/180 bear call spread for $.65/share. Stop Loss: $172.44. Note: Close before 4/20 earnings.
WMT – Sold 10 May $65 naked puts spread for $.50/share. Stop Loss: $69.38.
CMTL – Over $14.60, we recommend buying 1,000 shares of stock. Target: $16.00 – 17.00. Stop Loss: $13.59.
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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Twitter: @GregCapra
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