Below is a daily chart of CSX Corporation (CSX), $47.65.
Trade: We recommend selling 10 Mar $50/55 bear call spread (37 DTE) for around $.88/share (closing mid-point but is extended hourly so will try to get filled on a bounce). Note: Close before 4/18 earnings.
Technical Setup: Breakdown daily after failed breakout, extend weekly, and climactic sell setup monthly chart.
Option Strategy: Bear Call Credit Spread. Defined risk strategy where you make maximum profit (net credit received) if the stock closes below the short call strike at expiration. We sell call strike price above resistance where the pattern suggests that the stock will not close above at expiry, and simultaneously purchase higher strike call than the one sold as a hedge and to reduce margin. The return on investment (ROI) is the credit received divided by the maximum loss (i.e., width of strike prices less premium received). The breakeven is the lower strike price less credit received (i.e., also your cost basis if assigned the stock). Considered a mildly bearish strategy since we are not buying puts (or shorting stock) and just calling a short-term top in the pattern. Trade has positive theta (meaning you make money on time decay) making it a high probability trade since we time with the technical pattern.
Max Gain: Credit received. Cushion of 6.4% to break even of $85.75.
Stop Loss: $50.32.
Below are weekly and monthly charts of Navios Maritime Partners L.P. (NMM), $2.25.
Trade: We recommend buying 2,000 shares of stock around $2.25 closing price.
Technical Setup: Bullish Wide Range Bar (+WRB) breakout on the daily chart, breakout weekly, and monthly major support.
Stop Loss: $1.84.
Adjustments and Comments on Open Advisory Letter Trades
JWN – Sold 10 Mar $42.5/37.5 bull put spread for $230. Stop Loss: $42.18.
TLT – Sold 5-lot Apr $123/128 bear call spread for $.57/share and 5-lot for $.53/share for average of $.55/share. Nice gap down, move stop loss break even.
ROST – Sold 10 Apr $70/75 bear call spread for $550. Stop Loss: $69.62.
PCAR – Sold 10 Apr $62.5/55 bull put spread for $520. Stopped at $67.18 for $.50/share (break even). Since stock is at Major Resistance and market overbought, sell 10 Apr $70/72.5 bear call spread for $650 or better to convert to Iron Condor. Stop loss on the call spread is $69.52. This will bring in more premium to profit from time decay if PCAR remains range bound. Mid-point to close to close call spread is $.60/share so trail stop over a prior bar’s high to protect small profits.
MRO – Over $16.60, we recommend buying 1,000 shares of stock and selling 10 Apr $18 calls (50 DTE) calls at mid-point (currently $.29 x .31, but will be higher when trade triggered). Not trigger and broke down so cancel trade.
FXA – Sold 5 (half lot) Apr $77/79 bear call spread for $.40/share and 5-lot for $.36/share for average basis of $.38/share. Stop Loss: $76.22.
BA – Trade #1: Sold 10 $187.5/195 bear call spread for $.86/share. Trade #2: Sold 10 $195/210 bear call spread for $.98/share. Move stop break even.
VIAB – Sold 10 Apr $45/47.5 bear call spread $.43/share. Stop Loss: $45.12.
EL – Sold 10 Apr $87.5/92.5 bear call spread for $.50/share. Mid-point to close is $.30/share, so bid $.25/share to book 50% profit and move stop loss break even.
AI – Shorted 1,000 shares of the stock at the opening price of $14.43. Trail stop over prior day’s high to book gains.
EEM – Sold 10 Apr $39/40.5 bear call spread for $.36/share. Stop Loss: $38.82.
NFLX – Trade #1: Sold 10 Mar $145/152.5 bear call spread for $.65/share. Mid-point to close is $43/share so move stop break even. Trade #2: Sold 10 Apr $150/170 bear call spread for $2.90/share. Stop Loss: $146.22. Note: E
XON – Sold 10 Apr $20/18 bull put spread for $350. Stop Loss: $19.88.
HTZ – Sold 20 Apr $20/17.5 bull put spread for $600. Stop Loss: $19.48.
KBH – Purchased 10 Jul $15 calls (136 DTE) and sold the Apr 19 calls (45 DTE) for a net debit of $2.95/share. Note: Holding over earnings (4/12) is higher risk. Stop Loss: $15.88.
HOG – Sold10 Apr $55 naked puts at $.93/share. Stop Loss: $55.48.
KORS – Sold 10 Apr $40 naked calls for $.40/share. Cost to close $.30/share so move stop break even.
UA – Bought 10 Apr $22.5 puts for $4.25/share. Sold Mar $17.5 puts for .25/share to convert to Bear Diagonal and lower cost basis to $4.00/share. Move stop loss $18.82.
UAL – Trade #1: Sold 10 Apr $79/82.5 bear call spread for $530. Trade #2: Sold 10 Mar $77/80 bear call spread for $270. Stop Loss: $77.42.
GPI – Sold 10 Apr $85/90 bear call spread $.47/share. Stop Loss: $83.22.
WTW – Over $18.50, we recommend selling 10 Apr $15/12 bull put spread at mid-point (currently $.52/share). Stop Loss: $17.47.
WFT – Sold 10 Apr $6 naked puts spread for $.19/share. Stop Loss: None for now since bullish long term.
You can sign up for the Master Trader Monthly Advisory here. Those that have been receiving the Advisory Letters and Intra-Day Update still will through the 14th. Our comprehensive Master Trader All-Inclusive Advisory Market Edge Membership includes the Advisory Letter — plus much more – in providing ongoing, invaluable trading information for active investors and traders. Check out what the amazing package includes. It is far more that the Letter, which provides market guidance and primarily trading opportunities. We will be holding our first group meeting soon to review the markets, trades, and trading techniques. Stay tuned!
Happy trading! If you have any questions or comments, please e-mail Greg Capra at Greg@mastertrader.com or Dan Gibby at Dan@mastertrader.com
All the best,
Greg Capra
Managing Director and Pristine Founder
Dan Gibby
Chief Options Strategist
Follow Greg on Twitter and StockTwits to get real-time updates:
Twitter: @GregCapra
Stocktwits: Greg_Capra
