The Low Cost Bearish (Short Stock) Call Hedge Strategy For The Week Of – 09-02-19

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 is one new selection for this week: MAR

On 08/29/2019, The current technical condition for MAR is weak. Although the stock has pulled back from higher prices, MAR remains susceptible to lower prices. The stock has underperformed the market when compared to the S&P 500 over the last 50 trading days. The MACD-LT is confirming that the intermediate-term trend is bearish. MAR’s chart formation indicates the stock is in a strong downward trend. The stock is in a short-term oversold condition based on a Slow % K stochastic reading of 20 or lower. Over the last 50 trading sessions, there has been more volume on down days than on up days indicating that MAR is under distribution, which is a bearish condition. The stock is trading below a falling 50-day moving average which confirms the weak technical condition of MAR. MAR could find secondary support at its rising 200-day moving average.