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Today we are looking at applying a Bull Put Spread on QBE Insurance Group Ltd (QBE).

Analysis:

QBE is currently trading at $11.50.

QBE has been trading in an uptrend since its lows back in January. Recently it has come off with the rest of the market. It has returned to the trend line and the 100 day MA.

The broader market is volatile and uncertain. This is likely due to a number of factors, but largely from the looming debt ceiling in the U.S. This uncertainty makes it hard to suggest any particular trade, so it may be that you need to time the entry of this position better to suit your broader market view.

QBE does look like it has stalled around here, and wants to hold the support and uptrend line. In this scenario we could look at a Bull Put spread, which profits provided the market remains above a particular price point. We could set that price point by selling at perhaps $11 for either October or November expiry. Provided QBE stays above that the $11 between now and then, the trade makes maximum profit. This trade is perhaps more suitable in these types of environments as it is more defensive. If QBE does hold the trend and move higher, then we can also look to close early.

If you would like to learn how and when to use this strategy, and other strategies like it, then please contact us here at TradersCircle on 03 8080 5788. Alternately, you can access some free resources off our website which runs through advanced strategies.