What’s the trade?
Money Vikings are bullish on Enphase, the company that makes microinverters for solar panels, and home battery backup-solutions. Having just broke above the 200 day moving average with an upwardly trending RSI and a bullish MACD cross-over, we like the opportunity for premium selling strategies with a decent IVR of 25%. This vertical put spread expires in 36 days, and we could theoretically collect up to $120 on expiration as long as ENPH stays where it is, or above 140.
With ENPH trading at 157 on 10/7:
- Buy the Nov 12 135 Put
- Sell the Nov 12 140 Put
- Premium: Try to collect around $120
- Rationale: This is a defined risk trade with a max loss of around $380 and a max profit of around $120. The plan is to exit once we hit 25%-50% of the premium received, prior to the 10/26 earnings event.
- Probability of making 60$: 74%
- Assumption: Neutral to Bullish
- Timeframe: 2 to 4 weeks.