Options Idea: Sell The Sep 18 2020 WFC 22.5-20 Put Spread @ 0.34

2020年8月22日

WFC is in a long-term downtrend, but wants to reverse course. There is a resistance around the $24 area that has held except in mid May when WFC made its 52-week low at $22 and then bounced quickly back the next day to close at $24. I'm going to sell a Bullish Put Spread at the 22.50-20.00 strikes. Since we are in a downtrend I'm going to play it safe and I'm not going to sell naked just in case WFC wants to make a new 52-week low during the next two months. This is a negative probability trade (expected loss > expected win), so it may not be for everyone.

20-WFC-01

• Opening Date: July 29, 2020
  
• Expiration Date: September 18, 2020
  
• DTE: 51
  
• IV: 44.94%
  
• IV Percentile: 59%
  
• Odds of Winning: 73.74%
  
• Odds of Max Loss: 12.38%
  
• Win: > 22.16 @ Expiration
  
• Loss: < 22.16 @ Expiration
  
• Reg-T Margin: $250
  

Chart Legend

• Green Area: 100% Win Zone. If we finish above or in the green area, we keep 100% of our initial credit. The size of the green area is the size of credit (our maximum win).
  
• Yellow Area: Danger Zone: We still win, but we have to give back some of the initial credit taken in.
  
• Red Area: If we finish in this area we have a loss. The size of the red area is the size of our maximum loss.
  
• 1 standard deviation, 2 standard deviation, 3 standard deviation projections from Opening Date to Expiration Date are included.