TAN ETF – Invesco Solar Bull Call Spread

Bull Call Spread

A Bull Call Spread is a long call (debit) and a short call (credit) farther out of the money. It reduces the price of going long in a stock or ETF because you get to collect a credit, thereby reducing the overall net price you pay out of pocket. The disadvantage of this strategy is that you are also limiting your upside profit potential at the strike of the short call you sold (100 in this case).

Profit & Loss graph for the TAN trade, at expiration (12/17)
TAN MV Valhalla Indicator
TAN Daily Chart
What’s in the TAN ETF?
What’s the Trade?
With TAN trading at at $97.44, consider purchasing a debit vertical call spread that profits at around $99 or higher, out to December 17th expiration. I was able to enter this trade for a $91 debit.

• Sell to Open a 100 strike call (12/17)
• Buy to Open a 98 strike call (12/17)

Rationale: This is a defined risk trade. You can make up to $109 by 12/17 if TAN is trading above your 100$ strike.
Assumption: Bullish
Timeframe: ~1 month
Max Loss : $91, or the premium you spent to enter this trade

– Jerry

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