10/15/21 Update – We did not get the rally in ARKG that we needed to break even on this trade. The 10/15 $85 call expires today and I’m trying to close for $1 in credit. If we don’t get it, the trade will expire and that’s OK too in this case. Total loss on this one was $212 10/6/21 Update – This trade has not been profitable and has 9 days remaining. With ARKG trading around $71, we can either (1) Close the entire trade at this point, or (2) buy to close the $90 strike call and wait and see if the $85 strike call we own begins to gain in value. I am going with the 2nd option (buying to close the call we initially sold) because it is worthless–we should capture that profit. For our $85 call we still own, ARKG could still reverse and move higher over the next 9 days and we only have $2 to lose for waiting until the15th. – Jerry
What’s the trade?
Buy a Bullish Call Spread in ARKG for $212 or less.
With ARKG trading at $85 on 8/30
Buy the Oct 15th 85 Strike Call
Sell the Oct 15th 90 Strike Call
Premium: Try to spend $212 or less
Rationale: We covered ARKG in our latest podcast last night. IVR is very low at 3.9% which supports a debit spread strategy. It seems poised for a breakout. Watch levels $92.50 and $103.32 for profit taking. This is a defined-risk trade. Max loss is the premium paid, or ~$212. Max profit is $287
Stop Loss: If ARKG is lower than $78.25 you may want to consider exiting the trade.
