Thursday, March 26, 2009

MA Bull Call Spread

Mastercard (MA) has been in a ascending triangle pattern in 2009 and looks to be wanting to breakout over 170 resistance. It is right at the 200 day ema so it could still take a few days but there is real strength here. I think the option trade to take here is a bull call spread.

Buy the April 170/180 call spread.

In this trade you are buying the 170 call and selling the 180 call.

Net debit right now is $4.20 and that is your max loss if MA is below 170 at expiration.

Breakeven is at 174.20 and max gain occurs over 180 when the spread is worth $10.

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