Chosen MDC for Bear Credit Spread

A little more risk as the probability of closing below $65 is 70% instead of the 80% I traditionally like to have. However here is my explanation of the trade.

MDC Bear Call Spread

Sold MAR $65 CALL for $1.10
Bought MAR $70 CALL for $.25

for a credit of $.85

If the stock closes below $65 in 23 days (MAR expiration) then the trade will be profitable.

Currently it is in the housing market which has been trending down and the stock itself is in a downtrending channel with resistance currently at $64 or the 50 dma.

MACD is peaking high and so is STOCH. A dividend of $.25 is coming on 2/23. I suspect the stock will drop to $58.50 before the next rebound.

No Tags