Click to rate this post!
[Total: 1 Average: 5]

Today we are looking at applying a Bull Put Spread on ANZ.

Analysis:

ANZ is trading at $25.42.

ANZ has found a strong base, using roughly $25 as key support over the past few weeks. There is plenty of upside potential with the next key resistance near $27 which is also roughly where the 200, 100, and 50 day MAs converge. The stochastic are also pointing up.

Instead of trading a directionally driven bullish position, we can use the key support at $25 defensively and implement a sidewards trade using Options. This way, we can place the risk of the position below support and provided the share price remains above it come expiry, maximum profit is made.

Let’s have a closer look:

Max Risk: $3,900

Max Reward: $1,100 (premium received).

As the payoff matrix below shows, provided ANZ stays above the key support at $25 by the 2nd of June (Thursday week) maximum profit is made. If we see a short run to roughly $26.50 then early profit taking is on the table, but mostly time decay (simply being in the trade) does most of the leg work.

If you would like more recommendations, call 03 8080 5788 and have a chat to an advisor.