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.
This Week’s Blow Off Top-Bottom Trades
Blow Off Trades, if any are posted on Monday, Tuesday and Wednesday around 11:00 AM EST
| Market Edge – ‘Market Posture’ | Bearish | ||||||||
| Bullish – Blow Off Bottom Horizontal Trades | Risk Capital | $20,000 | |||||||
| Combo | Combo | Combo | Total | ||||||
| Open | Short Put | Long Put | Long Call | Combo | % | ||||
| Open | Stock | 01/31/20 | 01/31/20 | 02/07/20 | Spread | 100% | Max | Risk Capital | |
| Stock | Date | Price | Strike Price | Strike Price | Strike Price | Cost | Target | Risk | Max Risk |
| CAT | 01/28/20 | $137.51 | 138.0 | 136.0 | 135.0 | $4.05 | $8.10 | $6.05 | 3.0% |
| CVX | 01/28/20 | $111.21 | 111.0 | 109.0 | 109.0 | $2.62 | $5.24 | $4.62 | 2.3% |
| Bearish – Blow Off Top Horizontal Trades | |||||||||
| Combo | Combo | Combo | Total | ||||||
| Open | Short Call | Long Call | Long Put | Combo | % | ||||
| Open | Stock | 01/31/20 | 01/31/20 | 02/07/20 | Spread | 100% | Max | Risk Capital | |
| Stock | Date | Price | Strike Price | Strike Price | Strike Price | Cost | Target | Risk | Max Risk |
| NONE | 01/28/20 | $0.00 | 0.0 | 0.0 | 0.0 | $0.00 | $0.00 | $0.00 | 0.0% |
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Results for this week’s trades will be posted over the weekend on the Scoreboard.