This is a Bullish Debit Call Spread on JP Morgan (JPM) with an expiration date of August 18, 2023. Here's a breakdown of the trade:
1. Strategy: A Bullish Debit Call Spread is a bullish strategy that involves buying a call option and selling another call option with a higher strike price on the same underlying asset and with the same expiration date. This strategy is used when the trader expects a moderate rise in the price of the underlying asset.
2. Trade Setup: In this case, the trader is buying to open a call option on JPM with a strike price of $150 and selling to open a call option with a strike price of $155. Both options expire on August 18, 2023.
3. Premium and Risk: The trader is paying a net premium of $1.90 per share (the difference between the mid prices of the two options), for a total cost of $190 (since each contract represents 100 shares). This is also the maximum risk of the trade. The maximum profit is $310, which is the difference between the strike prices ($5) minus the net premium paid ($1.90), multiplied by 100.
4. Breakeven Point: The breakeven point at expiration is $151.90, which is the lower strike price plus the net premium paid.
5. Probability of Profit (POP): The estimated POP is 20.44%. This is a rough estimate of the chance that the trade will be profitable at expiration. Please note that this is a simplification and actual probability may vary based on factors like changes in implied volatility or the price of the underlying asset. The POP is based on the delta.
6. Implied Volatility (IV) Rank: The IV Rank is 11.21, which is relatively low. This means that options on JPM are currently cheaper compared to their historical prices.
7. Days to Expiration (DTE): There are 36 days left until the options expire.
8. Delta and Theta: The position delta is 0.2044, which means the position's value is expected to change by approximately $20.44 for a $1 change in the price of JPM. The position theta is -0.0091, which means the position's value is expected to decrease by approximately $0.91 each day due to time decay, all else being equal.
Remember, while this trade has a potential for profit if JPM rises moderately, it also carries risk. The maximum loss (the premium paid) would occur if JPM is below $150 at expiration. It's important to consider these factors and your own risk tolerance before entering any trade.
Neutral: if you think the stock will stay in it's range
If you think that the price of JP Morgan will stay range bound, as explained in the article linked above, do make sure that you change the strikes depending on the current stock-price.
Bearish Debit Put Spread: if you think the stock will go down in the coming days
