I am often asked where to get trade ideas. That is a very good question because there are various sources. Certainly, hunting and pecking is one way. Another is to use a scanner. In Group Coaching class, we often model out vertical credit spreads, many of which come from MTM’s Credit Spread Genius scanner. Let’s take a quick look below at one that popped up recently.
AAPL Bull Put
Apple Inc. (AAPL) is a stock I personally like to trade often. On a recent Monday, a bull put spread trade idea popped up on the Credit Spread Genius scanner (see below).
The trade was to sell a Jan25 (53 days to expiration) 225/230 bull put spread for a credit of 1.80. At the time of the trade, the position had a positive delta of 0.11, and positive theta was less than a penny a day. It was pretty much a delta trade at that point. But what I liked about it was the potential support the chart showed (see below).
Support Provided an Edge
Because of the potential support at the $230 level from previous support and resistance levels at the $230 price point, gave the trade idea an edge. Support like resistance has a better chance of keeping the underlying from moving through that level. What is important is that I like the trade idea too. Just because the scanner shows someone trading 1,000 contracts, it does not guarantee me success. Me liking the position doesn’t either, but I must be comfortable and understand the position to trade it. In this case, I was.
Final Thoughts
It is great to have several resources for trade ideas. And of those I use, I consider Credit Spread Genius a really good one. That said, it is also important to like and understand the trade idea. Otherwise, you are just gambling.
