I recently launched a Facebook Group – Elite Option Traders Community as a way of bringing people together and sharing trade ideas etc.
It’s a completely free group and I’ll be sharing lots of tips and other ideas as well.
I know not everyone is on Facebook and some people outright despise it and that’s fine. I’ have a love-hate relationship with the company myself. But, if you’re on Facebook and you want to join a group of traders who are dedicated to improving and growing, then I hope to see you there!
Today, we started with the first trade idea – a Bull Put Spread on Visa.
V has been one of the strongest stocks in the market for the last few years. On the latest leg of the rally, the 20-day moving average has provided strong support. After briefly opening below that line today, V quickly recovered and had a strong close.
A December 20th, Bull Put Spread at 150-145 can be sold for $1.10 with maximum risk being $3.90. This results in a return of 28.21% if V finishes above 150 at expiry with a breakeven point at $148.90.
For a trade like this I would either hold to expiry if V continues to rally or close out early if I can achieve a 20% return on capital at risk within the first 6-8 weeks.
In terms of stop loss, the 20-day moving average provides a nice line in the sand, any close below that would make me rethink the position. Otherwise a stop loss of 10% of capital at risk is also a good idea.
I’ll try and post all 10 trades here on the blog as well, but if you don’t want to miss any make sure you join the group:
Disclaimer: The information above is for educational purposes only and should not be treated as investment advice. The strategy presented would not be suitable for investors who are not familiar with exchange traded options. Any readers interested in this strategy should do their own research and seek advice from a licensed financial adviser.