This Bullish Options Trade Costs Almost Nothing to Put On

Micron

The trade involves selling a put spread and buying a call spread to capitalize on an expected upward move in Micron. The maximum profit is achieved if Micron moves within the range of the spread, while the maximum loss is limited to the cost of the spread. The trade is expected to be profitable if Micron rallies, with the potential for a significant profit if the asset moves up to the upper strike of the call spread. The trade is timed to capture a short-term rally, with the potential for a credit on both entry and exit.

MICRON

The speaker is short a put spread on Micron, with the short put strike at 800 and the long put strike at 850. The trade is expected to benefit from the current high volatility and the price being near the short put strike. The target profit is $250 to $400, with the trade being closed if Micron rallies significantly or if the price breaches below the short put strike. The trade is expected to be a fast mover due to the current volatility and the price being within the expected range.

Super Bull Strategy for Volatile Assets

A super bull strategy involves selling a put spread and buying a call spread to capitalize on upward movement. This strategy is particularly effective when the underlying asset is expected to move significantly in one direction. The maximum profit is achieved if the asset moves within the range of the spread, while the maximum loss is limited to the cost of the spread. This approach is suitable for assets with high volatility and where the trader expects a directional move.

Volatility and Premium in Short Put Spreads

The speaker highlights that volatility in Micron's price movement significantly impacts the premium of short put spreads. High volatility can lead to increased premium, as seen in the example where the premium was higher compared to the previous day. This is due to the realized volatility affecting the value of the options.

What is the maximum profit for the super bull trade on Micron?

The maximum profit for the super bull trade on Micron is $2,100 if Micron moves up to 1120.

TakeawayThe maximum profit is achieved if the underlying asset moves to the upper strike of the call spread.

What is the expected range for Micron in the September cycle?

The speaker mentions that Micron is within the expected range for the September cycle, with a 255-point implied range for the cycle.

TakeawayThe expected range for Micron in the September cycle is 255 points.