Options Trade Of The Week – TGT

Posted in: Options Trading, Stock Trading, Trade Of The Week, Trading Article

Risk can increase in a hurry!

That is the story of the last week.

We have seen the market volatility pickup across the board over the last few weeks. This is due to a number of factors including:

  • Headlines from the ongoing trade way with China,
  • President Trump tweeting about China and
  • The need for the Fed to cut interest rates.

Bottom line is the uncertainty that has come back into the market over the last few weeks is great for us as options traders.

Call Spread Options Strategy

Due to volatility increasing we are left with expensive options on many stocks that we trade. To take advantage of the expensive options we will look at selling a call spread for our Options Trade Of The Week.

We are going to go to Target (Symbol: TGT) which saw a 20% move higher this week along due to their positive earnings release. As a result, the stock is extremely overbought in the near term.

Combine that with the market selling off to end the week and we have a prime opportunity to sell a call spread.

Trade Details

We are going to sell the 20 Sep 19 107/109 call spread for $.68 or $68 per spread.

This means we are selling the 107 call and buying the 109 call at the same time.

We are left with a neutral to bearish position that makes money as long as TGT stays below $107.68 per share over the next 28 days.

Profit is also made from time decay adding up and volatility decreasing.

For a complete break down of our Trade Of The Week as well as a look at our open trades from the last few weeks 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.

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.

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CoachMike

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2 Responses to “Options Trade Of The Week – TGT”

  1. mrk zym

    hi ,you selling call option and buying call option.can you make it a spread buying call option and buying put option. ?

    Reply
    • CoachMike

      You can put on a strangle which is done by buying a call and a put at the same time. This is not a strategy we use very often. We prefer the higher % trades that require less capital which is what we did by using the vertical spread.

      Reply

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