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’ | Bullish | ||||||||||
| Bullish – Blow Off Bottom Horizontal Trades | Risk Capital | $20,000 | |||||||||
| Open | Short Put | Long Put | Long Call | Combo | % | ||||||
| Open | Stock | 10/11/19 | 10/11/19 | Spread | 10/18/19 | Long Call | Spread | 100% | Max | Risk Capital | |
| Stock | Date | Price | Strike Price | Strike Price | Credit | Strike Price | Debit | Total Cost | Target | Risk | Max Risk |
| CAT | 10/07/19 | $120.83 | 120.0 | 118.0 | $0.59 | 116.0 | $5.60 | $5.01 | $10.02 | $7.01 | 3.5% |
| IBM | 10/07/19 | $141.90 | 142.0 | 140.0 | $0.70 | 137.0 | $7.05 | $6.35 | $12.70 | $8.35 | 4.2% |
| PYPL | 10/09/19 | $100.19 | 100.0 | 98.0 | $0.59 | 97.0 | $4.00 | $3.41 | $6.82 | $5.41 | 2.7% |
| Bearish – Blow Off Top Horizontal Trades | |||||||||||
| Open | Short Call | Long Call | Long Put | Combo | % | ||||||
| Open | Stock | 10/11/19 | 10/11/19 | Spread | 10/18/19 | Long Put | Spread | 100% | Max | Risk Capital | |
| Stock | Date | Price | Strike Price | Strike Price | Credit | Strike Price | Debit | Total Cost | Target | Risk | Max Risk |
| NONE | 10/07/19 | $120.00 | 118.0 | 120.0 | $0.60 | 122.0 | $5.60 | $5.00 | $10.00 | $7.00 | 3.5% |
| $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.