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Today we are looking at applying a Bull Put Spread on Woolworths Group Ltd (WOW)

Analysis:

WOW is currently trading at $39.39.

WOW has been trading in a solid uptrend since the pandemic crash in roughly March last year. Recently, WOW came back to the uptrend line, and today shows it holding both the uptrend line and support level. The stochastic are also oversold and the share price has been unwilling to stay below the 200 day MA.

To trade this, we suggested to clients to enter a Bull Put spread with the sold leg at $39.00 and a May expiry. Therefore, if WOW holds the key support and uptrend line at $39.00 come expiry, the trader will make maximum profit. If WOW experiences strong buying and we see a rally back above $40 in the next week or so we can close early for a great profit. Otherwise, we are happy to see WOW track sideward and consolidate. If it does so, then the amount of bullish movement needed to close early for a good profit is also reduced.

We like this strategy because we can use the key level at $39 where both the uptrend line comes in and the key level of support is to help protect the trade. In doing so, it also means we can profit from both bullish, sideward, and a small amount of bearish movement – something unique to options.

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 download a free eBook off our website which runs through advanced strategies.