Why this SMCI Credit Put Spread Makes Sense for $1.40 Credit


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This SMCI Credit Put Spread Can Net 39% in 7 Days

Bullish play with a target stock price of $740 or above

Strategy has +39% upside potential and 22% overvalued


Expiration23-Feb-24
Buy735 Put
Sell740 Put
Credit:$1.40


Super Micro Computer has increased by +2.0% today to $788.22. Based on moving averages, SMCI has been in a uptrend since January 3, so this spread would be a great way to leverage a bullish outlook. Based on historical stock price behavior, this spread for SMCI has a theoretical 80% success rate.

Option Profit Calculator for SMCI Put Spread at 23-Feb-24 Expiration

If SMCI stock price at expiration is at or above $740.00, this spread has a 39% upside potential

The optimal stock price for this option strategy is to close at or above $740.00 on the expiration date, February 23, 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 7 days left until expiration.

The maximum gain will be realized if the stock price is at or above 740.00. The maximum gain is $1.40

The breakeven point is at 738.60, which is 6.8% below the current spot price.

The maximum loss will occur when the stock price is at or below 735. The max loss is $3.60.

SMCI Spread Current Market Price vs. Historical Average

SMCI Put Spread is trading at a 22% premium to historical average.

Using historical data to measure how a similar spread in SMCI was priced in the market, the 4-year average value was 1.15, with a high mark of 1.96 and a low of 0.68.

Currently, this vertical put spread is bid at 1.40 and offered at 3.20. The midpoint of the spread is 2.30.

If we use 1.15 as our historical fair value benchmark, the current market bid price is at a 22% premium, while the current market midpoint represents a 100% premium.

Current PriceHistorical Values of Similar Spreads
BidAskMidpointAverageHighLow
1.403.202.301.151.960.68
Market Chameleon captures daily records of market data to calculate historical benchmarks and generate estimated values.

Takeaway

The SMCI 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 22% overpriced relative to historical measures, and will benefit from a stock price at or above $740.

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


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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.



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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