[Options] Golden Trigger
Here's the Play:
I'm buying a $AU July 25/30 Bull Call Spread for $1.60. This means I'll be long the 25 calls and short an equal amount of 30 calls for a net debit. This is a defined risk trade. The most I can lose is the debit I pay to put the trade on.
If $AU closes below $20.00 at any time during my hold, then I'll consider my bullish thesis busted and I'll look to close the trade out and salvage whatever is left of the premium.
On the upside, if the breakout materializes, the most this spread can be worth is $5.00 (the difference between the long strike and the short strike). However, I'll be looking to take my profit when I can sell the spread for $3.50. This would represent a little bit better than 50% of the maximum available profit in this trade. As is my custom, I'm not looking to squeeze every last nickel out of this trade -- more time in the trade gives Ms. Market more time to steal my profits back.
ASO subscribers, if you have any questions on this trade, please send them here.
If you'd like to try out All Star Options RISK FREE, join us here.