Quick Take: Low Cost Bullish Put Hedge Strategy
Time Frame: One to Twelve Weeks.
Stock: Bullish Market Edge Opinion – Long Stock Position.
Desired Stock Price Direction: Sideways to Up.
Option Position: Short ATM Put – Long ATM -1 Put (Bullish Put Credit Spread) and Long ATM Deferred Put.
Desired Result: Stock stays flat or moves up in price.
Maximum Risk: The stock declines in value. The loss is offset by the amount of the credit spread and the appreciation in the deferred anchor put.
Summary: If the stock stays flat or moves up, the credit spread will expire worthless and you will keep the credit. However, the deferred put will decline in value in line with the long stock position price rise. If the long stock position moves down, the loss will be offset by the amount of the credit spread and the appreciation in the deferred anchor put.
The following are this week’s Low Cost Put Hedge Selections. Each week, if conditions warrant one or more new stock positions are added to the Open Positions list. These stocks have a Bullish technical Opinion from Market Edge. The stocks and option spreads are added to the portfolio based on Monday’s opening prices. The stocks are removed from the portfolio after twelve weeks or if the Market Edge Opinion is downgraded from Bullish. To access The Low Cost Put Hedge informative booklet click on the Get The Booklet tab located on the home page or at the bottom of this page.
This Week’s Low Cost Bullish (Long Stock) Put Selections
There is one new selections this week: CVX
On 12/27/2019, There have been positive signs in some of the indicators suggesting that the stock has bottomed. Look for improvement in trend following indicators such as MACD-ST or short term moving averages for confirmation that a new uptrend is beginning. A break above resistance numbers would also confirm that higher prices are in the near term outlook. The stock is underperforming the market over the last 50 trading days when compared to the S&P 500. The MACD-LT, an intermediate-term trend indicator, is bullish at this time. A close above $119.97 is a number to watch to confirm a trend reversal. Momentum as measured by the 9-day RSI is gaining in strength. Over the last 50 trading sessions, there has been more volume on up days than on down days indicating that CVX is under accumulation, which is a bullish condition. The stock is trading above a rising 50-day moving average which confirms the improving technical condition. The stock is above a falling 200-day moving average which adds credence to a possible trend reversal.
Current Open Positions
| The Market Edge – Market Posture: | Neutral | ||||||||||
| Current Stock Price Is Monday Morning | |||||||||||
| Initial | Current | Short Put | Long Put | Initial | Initial | Initial | |||||
| Long | Stock | # Of | Stock | 01/03/19 | 01/03/19 | Credit | Anchor Put | Anchor Put | Anchor Put | Approx | Approx |
| Stock | Price | Weeks | Price | Strike | Strike | Spread | Exp. Date | Strike | Debit | Div Date | Div |
| CAT | $132.81 | 11 | $147.16 | 147.0 | 145.0 | $0.65 | 01/17/20 | 130.0 | $5.95 | N/A | N/A |
| XBI | $83.50 | 9 | $94.44 | 95.0 | 93.0 | $0.80 | 01/17/20 | 83.0 | $3.40 | N/A | N/A |
| CVX | $120.63 | 1 | $120.63 | 121.0 | 119.0 | $0.70 | 03/20/19 | 115.0 | $2.39 | N/A | N/A |
| N/A | N/A | ||||||||||
| N/A | N/A | ||||||||||
| N/A | N/A | ||||||||||
| ATM = At The Money. SP = Strike Price | |||||||||||
| Closed Positions | |||||||||||
| # Of | Close | ||||||||||
| Stock | Weeks | Price | $ P/L | % P/L | Reason | ||||||
| NONE | |||||||||||
Quick Take: Low Cost Bearish Call Hedge Strategy
Time Frame: One to Twelve Weeks.
Stock: Bearish Market Edge Opinion – Short Stock Position.
Desired Stock Price Direction: Sideways to Down.
Option Position: Short ATM Call – Long ATM +1 Call (Bearish Call Credit Spread) and Long ATM Deferred Call.
Desired Result: Stock stays flat or moves down in price.
Maximum Risk: The stock rises in value. The loss is offset by the amount of the credit spread and the appreciation in the deferred anchor call.
Summary: If the stock stays flat or moves down, the credit spread will expire worthless and you will keep the credit. However, the deferred call will increase in value in line with the short stock position price decline. If the short stock position moves up, the loss will be offset by the amount of the credit spread and the appreciation in the deferred anchor call.
The following are this week’s Low Cost Call Hedge Selections. Each week, if conditions warrant one or more new stock positions are added to the Open Positions list. These stocks have a Bearish technical Opinion from Market Edge. The stocks and option spreads are added to the portfolio based on Monday’s opening prices. The stocks are removed from the portfolio after twelve weeks or if the Market Edge Opinion is upgraded from Bearish. To access The Low Cost Call Hedge informative booklet click on the Get The Booklet tab located on the home page or at the bottom of this page.
This Week’s Low Cost Bearish (Short Stock) Call Selections
There are no new selections this week:
Current Open Positions