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Today we are looking at applying a Bull Put Spread on Australia and Newcrest Mining Ltd

Analysis:

NCM is currently trading at $26.10.

NCM has been trading in a downtrend since its highs mid-August last year. Recently, it returned to the long-term underlying uptrend and bounced. Furthermore, the bounce led NCM to break the downtrend line, and the subsequent pennant pattern. In addition, NCM looks to be in the early stages of a recovery, having started to make higher peaks and troughs.

You could look at a Bull Put on NCM. There is a good chance that you have an opportunity to enter this trade on the coming days, as we may witness a small pull back in NCM’s share price before it continues to move higher – a common occurrence in a solid uptrend.

The strategy involves selling a Put Option under the key support ($25.40) at $25, and then buying a Put option underneath that at $24.50 or $24. May expiry is appropriate although you could go further out.

Provided NCM remains above $25 come expiry, maximum profit is made. In addition, if NCM were to rally from here as expected we can look to close the trade early for a good profit as well.

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.