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’ | Bearish | |||||||
| 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 |
| NONE | 10/31/18 | #VALUE! | ||||||
| Market Edge – ‘Market Posture’ | Bearish | |||||||
| 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 |
| DIS | 10/31/18 | $115.45 | 115.0 | 116.0 | $0.56 | 113.0 | $1.72 | -$2.16 |
| PYPL | 10/31/18 | $84.81 | 84.5 | 85.5 | $0.56 | 83.0 | $1.22 | -$1.66 |
| * Selections are made on Monday, Tuesday & Wednesday and have Exp spreads with Friday’s expiration. | ||||||||
| **Selections are made on Monday, Tuesday & Wednesday and have Def Put/Call positions with next Friday’s expiration. | ||||||||
| Track Record | ||||||||
| Risk Capital | $20,000 | |||||||
| % | % Annualized | # Of | # Of | |||||
| Win % | Loss % | P/L | P/L | Trades | Weeks | |||
| 41.2% | 58.8% | 0.4% | 1.4% | 26 | 13 | |||
Results For Previous Blow-Off Trades
The results for this week will be posted over the upcoming weekend.