We are finally starting to see market selling this week for the first time in a number of months.
We have been talking about this move in our last few Options Trades Of the Week. With the selling starting to pickup, it will begin to open our playbook more.
You will be able to use a better mix of different Options strategies along with a mix of expiration cycles.
One of the names that has actually not participated in the selling yet is Pinterest. In fact Pinterest rallied up over 20% after earnings this week leaving it with an extreme overbought condition.
For our Options Trade Of The Week we will look to sell a call spread on Pinterest (Symbol: PINS). Selling a call spread will lave us with a neutral to bearish position.
We like selling a call spread as it will give us 5 ways of making money on the trade.
Short Call Spread – PINS
For our new trade on PINS we are going to be selling the Sep 20 37/40 call spread.
These are the monthly options with 49 days left to expiration. We are selling the 37 call and buying the 40 call at the same time.
We are looking to collect $.80 or $80 per spread while risking $120 per spread.
Using a call credit spread would allow us to make money from:
- Time decay adding up and every day that passes allows us to make money
- Volatility decreasing. If volatility starts moving back down that will cause the options to get cheaper.
For a complete break down of our Trade Of The Week make sure you review the video below. You will learn the details of how we are placing trade trade including how we plan on managing it from start to finish.
We also review 3 of our previous Options Trades Of The Week that we had on coming into this week. We closed out of 2 of them with nice profits and the third is still open with a partial profit. Make sure you review the video below for all the details.
Feel free to contact me directly with any questions you might have. Mike@netpicks.com.