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dzonefx
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Broj poruka : 469
Points : 2904
Date of Entry : 2013-01-29
Godina : 47
Lokacija : Beograd

Herbalife Ltd. (HLF)

on Tue Feb 28, 2017 7:45 pm
Herbalife Ltd. (HLF), $57.19


Trade:   We recommend selling 10 Apr $65/75 bear put spread (52 DTE) for $.85/share (current mid-point is $.53/share but we want price improvement on a bounce to improve reward-risk).

Technical Setup:   Shorting bounce on bearish gap breakdown on daily with major resistance above

Option Strategy:   Bear Call Credit Spread. Defined risk strategy where you make maximum profit (net credit received) if the stock closes below the short call strike at expiration.  We sell call strike price above resistance where the pattern suggests that the stock will not close above at expiry, and simultaneously purchase higher strike call 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 lower strike price less credit received (i.e., also your cost basis if assigned the stock).  Considered a mildly bearish strategy since we are not buying puts (or shorting stock) and just calling a short-term top 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:  $63.22.

source: mastertrader
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