free option strategy

Bull Call Spread – Free Trade Idea

Every Friday we give you a free options trade idea identified by Option Party. Today, we’re focusing on the Bull Call Spread.

OPPORTUNITY

There is an attractive bull call spread trade in CATERPILLAR (CAT). Currently it is trading for $129.70.

CHARACTERISTICS

There is a 69.8% chance the stock will close above 126.00 on 11-10-2017, and you will earn your target return of $2,419.85. There is a 73.2% chance the stock will close above 125.22 on 11-10-2017, and you will earn a profit. There is a 14.4% chance the stock will close below 122.00 on 11-10-2017, and you will have a total loss of $9,965.25.

ENTRY PLAN

To enter this position you will buy 31 call options expiring on 11-10-2017 with a 122.00 strike price and sell 31 call options expiring on 11-10-2017 with a 126.00 strike price. This will require a net debit of $3.20. The commission for this trade will be $45.25.

DISCLAIMER

All information presented here is current as of October 13, 2017 1:27 am (EST). All trading involves risk. Free trades ideas are presented for illustrative purposes only and are not to be construed as financial advice.


How Did We Do? The Results…

This trade employed a Bull Call Spread strategy that needed CAT to close above $126.00 on November 10, 2017 to earn the targeted return. CAT closed at $136.48 which resulted in a return of $2,419.85.