Option Trading Idea: Nasdaq-100 (NDX) Bull Put Spread

When the markets are selling off and the CBOE Market Volatility Index (VIX) and volatility are on the rise, puts generally get more expensive. The ONN Idea Generating Platform (IGP) found some advantages pricing in the Nasdaq-100 Index (NDX).

This strategy is one for the bulls out there who want to take advantage of favorable pricing on put spreads today. This spread is 70 points out-of-the-money, which means the NDX could drop another 3.9% until you are at breakeven. Remember this trade is not without risk. The 50-day moving average currently stands at 1,719.

NDX Credit Spread Trade Details:

The NDX is currently trading at $1,769.

Credit Spread/Bull Put Spread–

• Sell the December 1,700 put for $20.10 per contract.
• Buy the December 1,675 put for $15.30 per contract.
• Net credit of $4.80

Profit/Loss Details:

Maximum profit: $4.80 (the credit collected).

Maximum risk: $20.20 (the difference between strikes minus the credit collected). Return on risk is about 24%.

Breakeven: 1695.20 (the strike of the short put minus the premium).

Remember, trading Ideas are generated by the ONN Idea Generating Platform as a starting point for people to begin their own research. Trading ideas are not intended as trading or investment advice or recommendations that any particular security or strategy may be suitable for any specific person. You are solely responsible for your investment decisions, but we hope that some of these ideas will give you a starting point as you look for strategies to employ.

Keep an eye on the “Trading Idea” section of www.ONN.tv for more ideas from nine different option trading strategies, courtesy of the ONN Idea Generating Platform.