Option Trading Idea: Coca-Cola (KO) Bull Put Spread

The Coca-Cola Company (KO) is currently testing support at its 50-day moving average. If you believe KO will hold its recent support and stay above this trendline despite the market’s recent struggles, consider this purely defensive bullish put spread strategy.

More News On KO

• KO

• Dr Pepper 2Q net income rises; revenue fall short, APFN
  July 29, 2010
• Olympic committees striking some unusual deals
  July 29, 2010
• Coca-Cola Enterprises boosts 2Q profit
  July 28, 2010

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KO Credit Spread Trade Details:

KO is currently trading at $53.33.

Credit Spread/Bull Put Spread–

• Sell the December 52.50 put for $1.30 per contract.
• Buy the December 50 put for $0.60 per contract.
• Net credit of $0.70

Profit/Loss Details:

Maximum profit: $0.70 (the credit collected).

Maximum risk: $1.80 (the difference between strikes minus the credit collected).

Breakeven: $51.80 (the strike of the short put minus the premium).

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