Today’s MRKT Call is Presented by Fidelity

Time To Get Bullish Oil?

On the latest episode of MRKT Call, Dan Nathan, Guy Adami and Carter Worth discuss the S&P rally back toward its highs, and offer trade ideas in oil, Uber and Tesla.

Click here to access all of the charts mentioned in today’s MRKT Call.

USO ($75.30) Buy June 76/83 Call Spread for ~$2

• Buy to open 1 June 76 call for ~$2.50

• Sell to open 1 June 83 call at ~$0.50

Break-Even on June expiration:

• Profits of up to 5 between 78 and 83 with a max gain of 5 at 83 or higher

• Losses of up to 2 between 76 and 78 with a max loss below 76

Trade Rationale and Management:

• This trade idea risks 2.6% of the ETF price, breakeven up ~3.5% and has a max potential gain of 5 or ~6.5% if the ETF is up ~10% in a month and half

• As always with long premium directional trades, I will look to take half off if a double and look to cut the position entirely if the trade is worth about 50% of the original premium paid for the trade

Buy May/July 170 Put Calendar for ~$7.75

• Sell to open 1 May 170 put at ~$1.75

• Buy to open 1 July 170 put for ~$9.50

Break-Even on May Expiration:

• If the stock is 170 or higher the May put expires worthless and you are left owning July 170 put for $7.75

• The max risk is the $1 premium paid. 

Trade Rationale:

• Financing owning the longer-dated put 

Buy June 80/65 Collar for ~$0.20 vs. Long 100 Shares at $71

• Sell to open 1 June 80 call at ~$1.70

• Buy to open 1 June 65 put for ~$1.90

Break-even on June expiration:

• Profits of up to 9 between 71 and 80 with max gain above 80, stock called away up 11%

• Losses of up to 6 between 71 and 65, stock protected below 65 down 8.5%

Trade Rationale

• A long holder would do this if they are more concerned with extreme downside than the possibility of extreme upside in the next month and half post-earnings

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WHAT WE’RE READING

• Stock Rally Stalls After S&P 500 Touches 5,200 (Bloomberg)

• Einhorn Says Markets Are ‘Broken.’ Here’s What Data Shows (Bloomberg)

• Disney says streaming is nearly breakeven, but shares sink 10% on soft guidance (CNBC)

• Apple announces new iPad Pro with M4, iPad Air tablets (CNBC)

• Fed Reluctance to Cut Rates Makes Easing Harder for Emerging Markets (WSJ)

• Can the Strong Dollar be Tamed? (FT)

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