Below is a daily/weekly chart of Weight Watchers International, Inc. (WTW), $17.58.
Trade: Over $18.50, we recommend selling 10 Apr $15/12 bull put spread (44 DTE) at mid-point (currently $.52/share).
Technical Setup: Bullish daily retracement from Pro Gap breakout daily and weekly 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: $17.47.
Below is a daily/weekly chart of Weatherford International plc (WFT), $6.66.
Trade: We recommend selling 10 Apr $6 naked puts spread (44 DTE) for $.19/share.
Technical Setup: Retracement from Pro Gap breakout daily and weekly charts.
Option Strategy: Short Naked Puts. 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, 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 with the technical pattern.
Stop Loss: None for now since bullish long term.
Adjustments and Comments on Open Advisory Letter Trades
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. Closed for $.20/share for quick $200 gain (50% of Max Profit).
TLT – Sold 5-lot Apr $123/128 bear call spread for $.57/share and 5-lot for $.53/share for average of $.55/share. Nice gap down, move stop loss break even.
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. Move stop loss on the put spread is $67.18. Since stock is at Major Resistance and market overbought, sell 10 Apr $70/72.5 bear call spread for $650 or better to convert to Iron Condor. Stop loss on the call spread is $70.32. This will bring in more premium to profit from time decay if PCAR remains range bound. Mid-point to close to close all is $1.15/share so we are break even here.
MRO – Over $16.60, we recommend buying 1,000 shares of stock and selling 10 Apr $18 calls (50 DTE) calls at mid-point (currently $.29 x .31, but will be higher when trade triggered). Note: Earnings 5/17. Stop Loss: $15.18
FXA – Sold 5 (half lot) Apr $77/79 bear call spread for $.40/share and 5-lot for $.36/share for average basis of $.38/share. Stop Loss: $76.22.
BA – Trade #1: Sold 10 $187.5/195 bear call spread for $.86/share. Trade #2: Sold 10 $195/210 bear call spread for $.98/share. Move stop break even.
SLV – We recommend selling 10 Apr $17.5 naked calls for $.33/share (closed at $.26 x 37share) or better. Stop Loss: $17.52. Still no fill so let’s cancel for now, will look for new entry.
VIAB – Sold 10 Apr $45/47.5 bear call spread $.43/share. Stop Loss: $45.12.
EL – Sold 10 Apr $87.5/92.5 bear call spread for $.50/share. Mid-point to close is $.30/share, so bid $.25/share to book 50% profit and move stop loss break even.
AI – Shorted 1,000 shares of the stock at the opening price of $14.43. Trail stop over prior day’s high to book gains.
EEM – Sold 10 Apr $39/40.5 bear call spread for $.36/share. Stop Loss: $38.82.
NFLX – Trade #1: Sold 10 Mar $145/152.5 bear call spread for $.65/share. Trade #2: Sold 10 Apr $150/170 bear call spread for $2.90/share. Stop Loss: $146.22.
XON – Sold 10 Apr $20/18 bull put spread for $350. Stop Loss: $19.88.
STLD – Sold 10 Apr $39/41 bear call spread for $.40/share. Mid-point to close is $.20/share so close here for 50% of Max Profit and $200 gain.
HTZ – Sold 20 Apr $20/17.5 bull put spread for $600. Stop Loss: $19.48.
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.
HOG – Sold10 Apr $55 naked puts at $.93/share. Stop Loss: $55.48.
KORS – Sold 10 Apr $40 naked calls for $.40/share. Cost to close $.30/share so move stop break even.
UA – Bought 10 Apr $22.5 puts for $4.25/share. Sold Mar (10 DTE) $17.5 puts for .25/share to convert to Bear Diagonal and lower cost basis to $4.00/share. Move stop loss $18.82.
UAL – Trade #1: Sold 10 Apr $79/82.5 bear call spread for $530. Trade #2: Sold 10 Mar $77/80 bear call spread for $270. Stop Loss: $77.42. Looks great, can add under lows.
GPI – Sold 10 Apr $85/90 bear call spread $.47/share. Stop Loss: $83.22.
TECD – Over 30-Min. high, we recommend selling 10 Apr $90/85 bull put spread (44 DTE) at mid-point. Traded under Stop Loss $90.48 before triggering so Invalid trade.
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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