Below is a daily chart of Citigroup Inc. (C), $66.89.
Trade: Over $67.10, consider buying Oct (10/20) $60 calls (93 DTE) and selling Aug (8/4) $68 calls (16 DTE) for mid-point (closed at $6.94/share).
Technical Setup: Bullish retracement to Rising 20-MA daily and strong uptrend weekly and monthly in bullish banking sector.
Option Strategy: Bull Call Diagonal (BCD). Bull Call Spread except the ITM Call is longer dated to take advantage of longer Directional Bullish setup. Max Profit (estimate) is the width of Call strikes – Debit. Breakeven (estimate) is the Long Call strike price – Debit.
We recommend .70 Delta ITM Calls and short Calls (less than 30 DTE) above resistance where think will expire below at Expiry. Goal is to profit as stock rises with ITM Call and routinely sell OTM calls to earn $$ from time decay.
Similar to Covered Call except ITM Call replaces long stock. Done to reduce the risk of loss and lower cost of long call. Caps gain but increases probability of profit since lower break even and less Max Loss than long call only.
Stop Loss: $65.38.
Below is a daily chart of Marriott International, Inc. (MAR), $102.00.
Trade: Over $102.31, consider shorting Aug (8/4) $100/97 bull put spread (16 DTE) for mid-point (closed at $.66/share).
Technical Setup: Breakout daily and Buy Setup weekly.
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: $99.88.
Below is a daily chart of The Home Depot, Inc. (HD), $152.17.
Trade: Under $151.98, consider shorting Aug (8/4) $155 calls (16 DTE) and buying Aug (8/4) $160 calls for mid-point (closed at $.66/share).
Technical Setup: Sell Setup at Declining 20/50-MA.
Option Strategy: Bear Call Credit Spread (BCS). 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 break-even is the short strike price plus 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 entry with the technical pattern.
Max Gain on Call Spread: Credit received. Cost basis if assigned is lower strike plus Credit.
Stop Loss: $154.62.
Below is a daily chart of Caesars Entertainment Corporation (CZR), $13.15.
Trade: Over $13.20, consider buying the stock. Note: Earnings 8/1.
Technical Setup: Bullish Wide Range Breakout daily and weekly.
Stop Loss: $12.35.
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.
