Quick Take: Blow Off Bottom – Bullish Trade
Time Frame: Three To Seven Days.
Underlying Stock: Bullish Market Edge Opinion – No Position.
Desired Stock Price Direction: Up.
Option Position: Short Expiring ATM Put – Long Expiring ATM -2 Put (Credit Spread) & Long Deferred ATM +2 Call.
Desired Result: The stock performs as anticipated. The short expiring put credit spread expires worthless and the long call gains additional premium.
Maximum Risk: Initial Put Credit Spread minus the Deferred Call Debit.
Quick Take: Blow Off Top – Bearish Trade
Time Frame: Three To Seven Days.
Underlying Stock: Bearish Market Edge Opinion – No Position.
Desired Stock Price Direction: Down.
Option Position: Short Expiring ATM Call – Long Expiring ATM +2 Call (Credit Spread) & Long Deferred ATM -2 Put.
Desired Result: The stock performs as anticipated. The short expiring call credit spread expires worthless and the long put gains additional premium.
Maximum Risk: Initial Call Credit Spread minus the Deferred Put Debit.
Current Blow Off Trades
| Market Edge – ‘Market Posture’ | Bullish | |||||||
| Blow Off Bottom Horizontal Trade (Bullish) | ||||||||
| Open | *Short-Exp | *Long-Exp | Put | Long-Def | Deferred | |||
| Open | Stock | ATM Put | ATM -2 Put | Spread | ATM +2 Call | Call | Max | |
| Stock | Date | Price | Strike Price | Strike Price | Credit | Strike Price | Debit | Loss |
| WYNN | 08/20/18 | $144.59 | 145.0 | 144.0 | $0.52 | 145.0 | $2.76 | -$3.24 |
| Blow Off Top Horizontal Trade (Bearish) | ||||||||
| Open | *Short-Exp | *Long-Exp | Call | Long-Def | Deferred | |||
| Open | Stock | ATM Call | ATM +2 Call | Spread | ATM -2 Put | Put | Max | |
| Stock | Date | Price | Strike Price | Strike Price | Credit | Strike Price | Debit | Loss |
| JNJ | 08/20/18 | $136.56 | 136.0 | 137.0 | $0.56 | 136.0 | $1.50 | -$1.94 |
| NKE | 08/21/18 | 82.18 | 82.0 | 83.0 | $0.44 | 81.5 | $0.79 | -$1.35 |
| FDX | 08/21/18 | 250.09 | 250.0 | 255.0 | $1.43 | 247.5 | $1.95 | -$5.52 |
| AGN | 08/22/18 | 191.11 | 190.0 | 195.0 | $1.25 | 187.5 | $1.40 | -$5.15 |
| * Next to symbol indicates that the stock selection is in its second week so the defered call or put is the same. | ||||||||
| ** Selections made on Monday & Tuesday have spreads with Friday’s expiration. Selections made on Wednesday, | ||||||||
| Thursday or Friday have spreads with the following Friday’s expiration. | ||||||||
Results For Previous Blow-Off Trades
The results for this week will be posted over the upcoming weekend.