BY LICIA LESLIE
January 28, 2024
As the BTCUSD chart is looking bullish, I will be shopping for call options in Marathon Digital Holdings (TIcker: MARA).
On Friday MARA gapped higher closing right at its 50 day moving average which is a bit higher than my red median line on the pitchfork.
Here is the 50 day moving average:
Here is the pitchfork:
MARA looks bullish to $20.70 possibly $21.80.
Looking at the options, I like the Feb16 expiration:
As you can see, there is a nice upside skew in the call pricing.
That means the out of the money calls are trading at a higher implied volatility than the at the money calls.
This is a great set up for a call vertical spread which buys the at the money option with the lower implied volatility and sells the out of the money call with a higher implied volatility.
This automatically puts edge in your spread as the theory is that the volatilities will come together as the stock price moves and time goes by.
I like buying the 18 calls with an IV of 105.24 and selling the 23 calls with an implied volatility of over 116.
I would pay $1.20 – $1.25 for this five point spread.
Watch for MARA to clear the 50 day moving average, meaning trade above it, before hopping in.
Use a close below that level as your stop loss.
Trade Review
I hope you hopped into that United States Oil ETF (Ticker: USO) trade as it was up 45% on Friday. USO is still looking higher.
Thanks for Reading … See You Next Tuesday,
Licia Leslie
Licia Leslie
Head of Technical Analysis
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