Quick Take: Blow Off Bottom – Bullish Trade
Time Frame: Three To Seven Days.
Underlying Stock: Bullish Market Edge Opinion – No Stock Position.
Desired Stock Price Direction: Up.
Option Position: Short Expiring ATM Put – Long Expiring ATM -2 Put (Bullish Put Credit Spread) & Long Deferred ATM +2 Call.
Maximum Risk: Initial Put Credit Spread minus the Deferred Call Debit.
Summary: The stock performs as anticipated. The short expiring put spread expires worthless and the long deferred call gains additional premium.
Quick Take: Blow Off Top – Bearish Trade
Time Frame: Three To Seven Days.
Underlying Stock: Bearish Market Edge Opinion – No Stock Position.
Desired Stock Price Direction: Down.
Option Position: Short Expiring ATM Call – Long Expiring ATM +2 Call (Bearish Call Credit Spread) & Long Deferred ATM -2 Put.
Maximum Risk: Initial Call Credit Spread minus the Deferred Put Debit.
Summary: The stock performs as anticipated. The short expiring call spread expires worthless and the long deferred put gains additional premium.
Current Blow Off Trades
| Market Edge – ‘Market Posture’ | Bearish | ||||||||||
| Bullish – Blow Off Bottom Horizontal Trades | Risk Capital | $20,000 | |||||||||
| Open | Short Put | Long Put | Long Call | Combo | % | ||||||
| Open | Stock | 08/16/19 | 08/16/19 | Spread | 08/23/19 | Long Call | Spread | 100% | Max | Risk Capital | |
| Stock | Date | Price | Strike Price | Strike Price | Credit | Strike Price | Debit | Total Cost | Target | Risk | Max Risk |
| LULU | 08/14/19 | $176.34 | 177.5 | 175.0 | $1.23 | 170.0 | $8.08 | $6.85 | $13.70 | $4.35 | 2.2% |
| PYPL | 08/14/19 | $104.19 | 104.0 | 102.0 | $0.67 | 100.0 | $5.00 | $4.33 | $8.66 | $2.33 | 1.2% |
| $0.00 | $0.00 | $0.00 | 0.0% | ||||||||
| Bearish – Blow Off Top Horizontal Trades | |||||||||||
| Open | Short Call | Long Call | Long Put | Combo | % | ||||||
| Open | Stock | 08/16/19 | 08/16/19 | Spread | 08/23/19 | Long Put | Spread | 100% | Max | Risk Capital | |
| Stock | Date | Price | Strike Price | Strike Price | Credit | Strike Price | Debit | Total Cost | Target | Risk | Max Risk |
| V | 08/13/19 | $177.49 | 177.5 | 180.0 | $1.05 | 182.5 | $5.95 | $4.90 | $9.80 | $7.40 | 3.7% |
| $0.00 | $0.00 | $0.00 | 0.0% | ||||||||
| $0.00 | $0.00 | $0.00 | 0.0% | ||||||||
Results for this week’s trades will be posted over the weekend on the Scoreboard.