Below is a daily chart of Veeva Systems Inc. (VEEV), $65.79.
Trade: Over $66.10, consider buying Aug (8/18) $55/70 bull call spread (24 DTE) for mid-point, but with a limit of $10.15/share since spreads might open near market open if triggers (closed at $9.95/share).
Technical Setup: Bullish breakout daily and weekly, strong uptrend monthly.
Option Strategy: Bull Call Spread (BCS). Defined risk strategy where you make maximum profit if the stock closes above the short call strike at expiration. We buy bullish calls and then sell OTM calls to reduce the cost of the long call and generate time decay income.
The return on investment (ROI) is the Gain divided by the Debit, which is the maximum loss. The break-even is the lower strike price plus debit paid. Considered a mildly bullish strategy since we are not buying outright calls or buying stock, and willing to cap our gains in exchange for gain from time decay.
Stop Loss: $62.98.
Below is a daily chart of Financial Select Sector SPDR® ETF (XLF), $24.89.
Trade: Over $24.95, consider buying Aug (8/28) $23.5 calls (24 DTE) for a limit of $1.51/share (which gives us high delta as a directional trade and paying no more than $.05/share time value). You may also buy stock instead but the low time value makes superior reward-risk versus stock.
Technical Setup: Anticipated Breakout daily with bullish consolidation daily and weekly.
Option Strategy: Long Calls (LC). Call buyer pays a premium for the right to buy the underlying asset (stock) at a specified price (strike) for a specified period of time (expiry). Long calls are used to capitalize on upside market movements with less cost (leverage) and to limit risk (to debit paid). One (1) contract represents the right to buy 100 Shares.
Potential Gain is unlimited; Max Loss is the Premium paid. Break-even point is Strike Price plus the Premium paid.
Stop Loss: $24.68.
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.
