AVGO is in the semiconductor industry which has been showing fair amount of volatility recently. Price went down by around $30 in 1 day and we want to come in and take advantange of the high premiums. high.
Expecting the stock price to remain under $240 until Feb expiry, so sold a Feb monthly expiry Bear Call Spread.
| SELL | -10 | TO OPEN | AVGO | 21-Feb-25 | 240 | CALL | 2.54 | 0.70 | 25TRD-004 |
| BUY | 10 | TO OPEN | AVGO | 21-Feb-25 | 245 | CALL | 1.84 | CREDIT |
The spread will expire in around 23 days and expire before the earnings date.
We are looking at a potential full credit of $700 on $4300 investment, resulting in around 16% approx returns if price does not breach upper threshold of $240.
