
Rocket - New Trade GME Credit Spread 09-09-20
Credit Spread - GME
All contracts are for Sept 11 expiration this Friday.
GME:
Sell $8 call (trading at about $0.56)
Buy $9 call (trading at about $0.31)
Place a limit order at $0.25 and no lower. We want a 3 to 1 risk vs. reward in this trade.
GME:
Sell $8 call (trading at about $0.56)
Buy $9 call (trading at about $0.31)
Place a limit order at $0.25 and no lower. We want a 3 to 1 risk vs. reward in this trade.
- This will result in a $0.25 credit per contract.
- Our max profit is $25 if GME stays below $8 as of Friday's close.
- Our max loss is $75 if GME closes above $9 as of Friday's close.
There is a $1.41 expected move priced into the option market right now ahead of their earnings after the bell tonight so we will look to absorb some of that premium above the market. We have a bearish bias in this trade.
We are risking $3 to make $1, and we lose our entire investment if GME trades higher with earnings, so keep your risk vs. reward in place accordingly.
GME is trading at $7.42.

