Hi Advanced Traders!
Since AMD is still trading between the downward trending support and resistance lines, we can set up some more bear call spreads. If you had some placed a couple of weeks ago and are already 50-80% profitable, you can consider closing your positions to restart new ones.
AMD BCS:
Expiration Date: June 17, 2022
Step 1: Buy 1 $150 strike call option (delta 0.02) for $14.
Step 2: Sell 1 $120 strike call option (delta 0.13) for $107.
Step 3: Set up a buy-stop order of 100 shares for $119 per share.
Credit: $107 - $14 = $93
The goal is to have AMD stay below $120 from now until June 17. If it does, both legs will expire worthless and you will be able to keep $93.
If AMD rallies up to $120, you will buy 100 shares for $119 each, convert your bear call spread into a covered call, and sell your first leg.
Remember that you don't necessarily have to wait until expiration. You can always lock in your profits if your contracts shrink 50-80% in value.
Also be mindful of how many bear call spreads you open. I know many of you have been profitable with this trade over the past several months. However, I recommend that you have capital to cover yourselves in case AMD starts to rise again.
Like always, you can use these numbers as a guide and feel free to tweak the numbers to your own preference and risk-tolerance.
Happy trading!😀
Steve and the Call to Leap Team
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