Below is a daily chart of Tesla, Inc. (TSLA), $316.05.
Trade: Over $318.00, consider shorting Jul (7/14) $295/275 bull put spread (4 DTE) for a limit of $.70/share (closed at $.77/share).
Technical Setup: Climactic Buy Setup, Bottoming Tail, Bullish Changing of the Guard, on Major Support.
Option Strategy: Bull Put Credit Spread (BPS). Defined risk strategy where you make maximum profit (net credit received) if the stock closes above the short put strike at expiration. We sell put strike price below support where the pattern suggests that the stock will not close under at expiry, and simultaneously purchase lower strike put 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 break-even is the higher strike price less credit received (i.e., also your cost basis if assigned the stock).
Considered a mildly bullish strategy since we are not buying calls or stock and just calling a short-term bottom in the pattern. Trade has positive theta (meaning you make money on time decay) making it a high probability trade since we time entry with the technical pattern.
Max Gain: Credit received. Cost basis if assigned is higher strike minus Credit.
Stop Loss: $303.48.
With oversold oil sector and high bearish sentiment, we want to keep an eye on it. Most patterns are not yet compelling for bullish plays, but we will monitor, and here are two lower priced ones for consideration:
Below is a daily chart of Cloud Peak Energy Inc. (CLD), $3.86.
Trade: Consider buying stock with a limit of $3.75/share (since extended intra-day).
Technical Setup: Breakout daily after failed breakdown, and higher low on extended monthly.
Target: $4.50 area.
Stop Loss: $3.58.
Below is a daily chart of Camber Energy, Inc. (CEI), $.32.
Trade: Consider buying stock with a limit of $.29-.30/share (since extended intra-day). NOTE: This is not an official trade which we will track because it is a penny stock; however, the pattern is compelling and risk-reward generous if you are comfortable with the risk and stop.
Technical Setup: Breakout daily after failed breakdown, after possible multi-year bottoming.
Target: $.50-.60 area (and monthly much bigger if truly bottoming??).
Stop Loss: $.24.
Adjustments and Comments on Open Advisory Letter Trades Note: Our Trade Updates are timely posted in a separate Report in the Member’s Area. Please see that document for a current reflection on all Open and Closed Trades since the spreadsheet updates immediately and will always be more current than this e-mail update. Thank you.
NOTE: Please see Master Trader Guidelines for Trading the Open and Gaps in Member’s Area for rules on trade entry, gaps, etc.
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
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NOTE: Master Trader will show opening and closing prices of all stock and option trades. We do not recommend proper share size for your particular trading style, risk tolerance, or account balance. We urge you to calculate your own share size based on your individualized risk parameters, Trading Plan, and familiarity with the proposed trade strategy and risk.
NOTE: Master Trader and its representatives might have existing positions in these and other trade recommendations before or after suggested herein. Additionally, we often manage them differently for internal purposes based on different risk parameters than noted herein.
