- July 12, 2019
- Posted by: CoachMike
- Categories: Options Trading, Swing Trading, Trade Of The Week
We have finally seen the news cycle start to settle down this week. After seeing headlines dominate trading the last 4-5 weeks with news out of the China/US trade war, new stimulus announced from the Fed, and an announced Brexit deal we are finally seeing markets focus on technicals again.
This is great news for us as the headline-driven markets can be difficult to manage.
With the latest market rally leaving us only a few percentage points away from all-time highs, we are left with many markets at overbought levels.
Nike Options Trade
One of the strongest stocks of the year so far is Nike (Symbol: NKE). The stock has had an incredible run higher all the way up to 95.56 and as a result, it is due for a pause or a pullback off the overbought levels.
For our Options Trade Of The Week, we will be looking to sell a call credit spread on NKE which would allow us to profit from a period of consolidation or even a move lower over the next few weeks.
- We will be using the 15 Nov 19 monthly options with 29 days left to expiration.
- This trade will be put on by selling the 97.5/100 call spread.
- We are selling the 97.5 call and buying the 100 call at the same time.
- We are able to collect $.70 or $70 per spread to put this trade on.
- This $.70 is our maximum profit potential on the trade.
This position requires $180 per spread to put on. This $180 is our maximum loss on the trade if the stock continues to move higher.
5 Ways To Make Money
We have 5 ways of making money on this trade. We make money if the stock moves up, down, or sideways as long as it stays below $98.20. We also make money from time decay adding up and from volatility decreasing.
We are left with a trade that has a high probability of success.
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 the trade including how we plan on managing it from start to finish.
If you are interested in learning how to find these trades, feel free to contact me directly with any questions you might have. Mike@netpicks.com.