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 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 |
| UAL | 10/01/18 | $89.28 | 89.0 | 90.0 | $0.50 | 88.0 | $0.96 | -$1.46 |
| IBM | 10/02/18 | $153.00 | 152.5 | 155.0 | $1.12 | 150.0 | $1.08 | -$2.46 |
| * Next to symbol indicates that the stock selection is in its second week so the defered call or put is the same. | ||||||||
| ** Selections are made on Monday, Tuesday & Wednesday and have spreads with Friday’s expiration. | ||||||||
Results For Previous Blow-Off Trades
| Blow Off Top Horizontal Trade (Bearish) | |||||||||||
| Open | Close | Open | Close | Open | Close | ||||||
| Open | Stock | Close | Stock | P/L | Spread | Spread | Put | Put | P/L | Weekly | |
| Stock | Date | Price | Date | Price | Stock | Credit | Debit | Debit | Credit | Trade | P/L |
| MCD | 09/26/18 | $166.37 | 09/28/18 | $167.29 | -$0.92 | $1.43 | $2.29 | $0.92 | $0.50 | -$128 | -$128 |
| $0 | -$128 | ||||||||||
| $0 | -$128 | ||||||||||
| $0 | -$128 | ||||||||||
| Total Risk Capital: | $20,000 | ||||||||||
| Profit/Loss Blow Off Top Trades: | -$128 | ||||||||||
| Weekly % Return: | -0.6% | ||||||||||
| Total Profit/Loss: | -$128 | ||||||||||
| Total Weekly % Return: | -0.6% | ||||||||||
| Win % | Loss % | % P/L | Trades | Annualized ROI | # Weeks | ||||||
| 38.5% | 61.5% | -0.1% | 22 | -0.5% | 9 | ||||||