This TLT Debit Put Spread Can Net 100% in 21 Days
Bearish play with a target stock price of $92 or below
Strategy has +100% upside potential and 3% undervalued
| Expiration | 15-Nov-24 |
| Buy | 96 Put |
| Sell | 92 Put |
| Debit: | $2.00 |
Option Profit Calculator for TLT Put Spread at 15-Nov-24 Expiration
If TLT stock price at expiration is at or below $92.00, this spread has a 100% upside potential
The optimal stock price for this option strategy is to close at or below $92.00 on the expiration date, November 15, 2024. In that scenario, both puts would be in-the-money, so the spread would be worth the maximum value of 4.00. That would equate to the potential upside of +100% for this put spread with 21 days left to expiration.
The maximum gain will be realized if the stock price is at or below 92.00. The maximum gain is $2.00
The breakeven point is at 94.00, which is 0.3% above the current spot price.
The maximum loss will occur when the stock price is at or above 96. The max loss is $2.00.
TLT Spread Current Market Price vs. Historical Average
TLT Put Spread is trading at a 3% discount to historical average.
Using historical data to measure how a similar spread in TLT was priced in the market, the 4-year average value was 2.07, with a high mark of 2.29 and a low of 1.89.
Currently, this vertical put spread is bid at 1.93 and offered at 2.00. The midpoint of the spread is 1.96.
If we use 2.07 as our historical fair value benchmark, the current market ask price is at a 3% discount, while the current market midpoint represents a 5% discount.
| Current Price | Historical Values of Similar Spreads | ||||
| Bid | Ask | Midpoint | Average | High | Low |
| 1.93 | 2.00 | 1.96 | 2.07 | 2.29 | 1.89 |
Takeaway
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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.
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