This META Bull Put Spread has Defined Risk and 39% ROI Potential


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This META Credit Put Spread Can Net 39% in 6 Days

Bullish play with a target stock price of $550 or above

Strategy has +39% upside potential and 4% overvalued


Expiration27-Sep-24
Buy545 Put
Sell550 Put
Credit:$1.40


Meta Platforms - Class A has increased by +4.1% today to $559.88. Based on moving averages, META has been in a uptrend since September 11, so this spread would be a great way to leverage a bullish outlook. Based on historical stock price behavior, this spread for META has a theoretical 82% success rate.

Option Profit Calculator for META Put Spread at 27-Sep-24 Expiration

If META stock price at expiration is at or above $550.00, this spread has a 39% upside potential

The optimal stock price for this option strategy is to close at or above $550.00 on the expiration date, September 27, 2024. In that scenario, both puts would expire worthless, allowing you to keep the entire $1.40 you received when selling the spread. That corresponds to a potential +39% return on the amount at risk with 6 days left until expiration.

The maximum gain will be realized if the stock price is at or above 550.00. The maximum gain is $1.40

The breakeven point is at 548.60, which is 2.0% below the current spot price.

The maximum loss will occur when the stock price is at or below 545. The max loss is $3.60.

META Spread Current Market Price vs. Historical Average

META Put Spread is trading at a 4% premium to historical average.

Using historical data to measure how a similar spread in META was priced in the market, the 4-year average value was 1.35, with a high mark of 1.73 and a low of 0.71.

Currently, this vertical put spread is bid at 1.40 and offered at 1.55. The midpoint of the spread is 1.48.

If we use 1.35 as our historical fair value benchmark, the current market bid price is at a 4% premium, while the current market midpoint represents a 9% premium.

Current PriceHistorical Values of Similar Spreads
BidAskMidpointAverageHighLow
1.401.551.481.351.730.71
Market Chameleon captures daily records of market data to calculate historical benchmarks and generate estimated values.

Takeaway

The META put spread we've identified here can be a good way to play a bullish outlook because the option strategy has a +39% upside potential, is 4% overpriced relative to historical measures, and will benefit from a stock price at or above $550.

See how Market Chameleon can help you make smarter and more efficient trades!


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About the Publisher - Marketchameleon.com:


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.



NOTE: Stock and option trading involves risk that may not be suitable for all investors. Examples contained within this report are simulated And may have limitations. Average returns and occurrences are calculated from snapshots of market mid-point prices And were Not actually executed, so they do not reflect actual trades, fees, or execution costs. This report is for informational purposes only, and is not intended to be a recommendation to buy or sell any security. Neither Market Chameleon nor any other party makes warranties regarding results from its usage. Past performance does not guarantee future results. Please consult a financial advisor before executing any trades. You can read more about option risks and characteristics at theocc.com.


The information is provided for informational purposes only and should not be construed as investment advice. All stock price information is provided and transmitted as received from independent third-party data sources. The Information should only be used as a starting point for doing additional independent research in order to allow you to form your own opinion regarding investments and trading strategies. The Company does not guarantee the accuracy, completeness or timeliness of the Information.