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dzonefx
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Number of messages : 584
Points : 3394
Date of Entry : 2013-01-29
Year : 48
Residence Country Residence Country : Beograd

GoPro, Inc. (GPRO)

on Tue Feb 28, 2017 7:41 pm
GoPro, Inc. (GPRO), $9.66
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Trade:   We recommend selling 10 Apr $8/6 bull put spread (52 DTE) for $300 or better (current mid-point).

Technical Setup:   Stabilization on daily and weekly chart with possible big Double Bottom on monthly chart.  NOTE:  We would never buy the stock in this setup; however, selling a put spread allows us to profit just for calling a bottom, with a “Cushion,” without worrying about how much it rallies.

Option Strategy:   Bull Put Credit Spread. Defined risk strategy where you make maximum profit (net credit received) if the stock closes above the short put strike at expiration.  We sell put strike price below support where the pattern suggests that the stock will not close under at expiry, and simultaneously purchase lower strike put than the one sold as a hedge and to reduce margin.  The return on investment (ROI) is the credit received divided by the maximum loss (i.e., width of strike prices less premium received).  The break even is the higher strike price less credit received (i.e., also your cost basis if assigned the stock).  Considered a mildly bullish strategy since we are not buying calls or stock and just calling a short-term bottom in the pattern.  Trade has positive theta (meaning you make money on time decay) making it a high probability trade since we time with the technical pattern.

Stop Loss:  $8.68.

source: mastertrader
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