- Market conditions are neutral to bearish. We need to hedge our long portfolio.
- Deere is in a weak industry group
- Money flow has turned negative
- Price is below the long and short term Chaikin averages.
- Relative strength agrees with the Power Gauge.
- The stock can rise a little, and we'd still potentially make our max gain. That's the beauty of spread trading, and our risk of loss is defined.
- Options spreads are high probability trade. We get a good win rate using Chaikin signals.
- Sell the May 90 Call; Buy the May 92.5 Call. Max profit occurs when price stays below at the sold strike, plus the credit received, at expiration.
Today, we're attempting to sell a call spread above the market on a money flow sell signal. Why we like the trade:
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