Bank of Queensland Ltd (BOQ) Logo

Today we are applying a Bank of Queensland Ltd (BOQ)

Analysis:

BOQ is trading at $7.24.

BOQ has been trading in a downtrend since its highs back late last year. It bottomed out recently and started moving higher to form a broad pennant triangle pattern. The pullback over the past couple of days, which includes an earnings report from BEN today, has caused BOQ to break the pennant pattern in the direction of the underlying downtrend.

The next key support is roughly near the recent lows at ~$6.65. CBA is going ex-dividend tomorrow. This can often lead to further selling and perhaps a small pullback across the financials, especially considering BEN’s report today.

Bank of Queensland Ltd (BOQ) 1

To trade this, we could look at a Bear Put spread, which uses Options to gain the ability to trade the downward movement. It also benefits from sideward movement too, so if BOQ continues drift as it has been over the past couple of weeks, then the strategy will profit. This particular Options strategy has a capped risk, and a capped profit. Here is a closer look:

Max Risk: $3,675.

Max Profit: $3,825.

Bank of Queensland Ltd (BOQ) 2

The payoff matrix below shows the profit and loss at different prices (Y axis) on different days (X axis). The current share price in the matrix is $7.245. If the share price were to fall towards the next key support at roughly $6.65, we would profit ~$2,800 (~75%). Otherwise, if the share price rose back through the key resistance at roughly $7.60, by the time we closed we would likely lose ~$2,000 (~50%). The great thing about this strategy is though, that if the stock drifts sidewards we slowly profit from time decay, especially with a small fall.

Bank of Queensland Ltd (BOQ) 3

There are other ways to set up these strategies. If you would like help with your trading, or want to learn how to implement these strategies alongside other sophisticated options positions, then consider getting in touch.