Bullish On NDAQ? You Might Want To Consider This Credit Put Spread Expiring in 10 Days


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By Dmitry Pargamanik

If You Are Bullish On NDAQ, Here Is A Credit Put Spread, Expiring On Sep 20, To Consider

NDAQ credit put spread statistics

Find NDAQ Option Trade Ideas

As you can see from the bottom section of the trade idea card, this strategy involves selling the 20-Sep-24 72.5 put and buying the 20-Sep-24 72.5 put.

Here Are The Highlights Of The Strategy

  • Market Price (Credit): 0.85
  • Theoretical Value: 0.66
  • Theoretical Edge: 11.3%
  • Yield Potential: 51.5%

What Needs To Happen?

NDAQ Needs To Remain Above 72.5

At the time of this writing, NDAQ was priced at 72.07. To achieve maximum profit from this spread, the stock must maintain a closing price above 72.5 on the option expiration date of September 20, 2024.


How Much Can You Make?

Max Profit of 0.85 Equates To A 51.5% Potential Return

In such a scenario, both puts would expire worthless, and you would retain the full credit received from selling the spread, which amounts to 0.85. When expressed as a percentage of the amount at risk, this put spread has the potential to yield a return of 51.5% (0.85 credit / 1.65 amount at risk).


What Is The Estimated Win Rate Of This Put Spread?

Estimated Win Rate Of 67%

Historical stock behavior implies that this particular put spread has an estimated success rate of 67%, but there is no guarantee or way of knowing NDAQ's future performance with certainty.


What Is The Risk?

NDAQ Stock Could Decline

Since this is a bullish strategy, it carries the risk of a stock decline. In this case, the break-even point on the downside is 71.65.


How Much Can It Lose?

Max Loss of $1.65 On A Stock Decline Below $70

If, at the option's expiration, NDAQ's price drops below the $70 strike, both put options will be in-the-money, causing the spread to be valued at $2.50 .In such a scenario, the max loss would amount to $1.65, assuming no exercise or assignment risks.


In Summary

What Makes This Opportunity Compelling?

This NDAQ bull put spread, set to expire on Sep 20, 2024, appears to have a theoretical trading edge and has a potential to generate significant returns while limiting risk.

When Should You Consider This NDAQ Bull Spread?

It is important to remember that the outcome is uncertain and that the strategy is of a bullish outlook. The stock has to stay above 72.5 at expiration to fully pay off.
As always keep in mind that all investments carry risk, and success is never guaranteed.

Don't Let an Opportunity Pass You By!

Find More NDAQ Credit Put Spread Strategies


And if you want to find more credit put spreads for other stocks, go to the bull put spread screener


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Marketchameleon is a comprehensive financial research and analysis website specializing in stock and options markets. We leverage extensive data, models, and analytics to provide valuable insights into these markets. Our primary goal is to assist traders in identifying potential market developments and assessing potential risks and rewards.



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