We own 100 shares of INTC with a covered call. The stock is currently in an abnormally tight Bollinger-Band squeeze pattern. While this suggests that we could be on the cusp of a volatility expansion in the near future. It does not suggest which direction the spike will go. We are leaning toward protecting the downside and see a move lower as slightly more likely than upside in the short-term. Mainly because the stock came from a downtrend and has been unable to rally with the Nasdaq recently (relative weakness). If we go higher, our covered call will benefit. If we go sharply lower, we will be able to take a profit on the protective put to offset some of the risk. Buy to open: INTC Sep 20th (monthly) 30.00 strike put
Debit: 1.85
Max risk = 1.85 or $185.00 per contractWe discussed our viewpoints on the Nasdaq exhaustion. We traded it with a long put and will now put on a lower delta spread trade. This won’t move quite as rapidly in value as a long option would. However, it still gives us a way to make some profits on a downside move in the coming weeks/months ahead in QQQ.
Buy to open: QQQ Sep 20th (monthly) 480.00 strike put
Sell to open: QQQ Sep 20th (monthly) 470.00 strike put
Debit: 3.40
Have a great week!