Option Trade: Gain Bullish Exposure To DocuSign With A Bull Put Spread | Summary and Q&A

TL;DR

Docusign is showing strong performance and traders can consider a bull put spread strategy to capitalize on the stock's strength.

Key Insights

• 💪 Docusign has strong ratings in RS (85), composite (99), and EPS (99).
• 🍳 The stock recently broke out above resistance, indicating bullish momentum.
• 🚄 The bull put spread strategy offers a potential return on risk of 49.25% if the stock remains above $290.
• 🙃 This strategy has limited risk exposure compared to owning the stock directly.
• 😫 Earnings risk is not a concern for this trade, as earnings are set for early September.
• 😚 Traders should consider closing the spread early for a loss if the price increases to $3.30.
• ✳️ Options trading carries risks, and investors should practice with virtual accounts before risking real money.

Transcript

Read and summarize the transcript of this video on Glasp Reader (beta).

Questions & Answers

Q: What is a bull put spread strategy?

A bull put spread strategy involves selling an out-of-the-money put option and buying a further out-of-the-money put option. It is a bullish strategy that aims to profit if the stock remains above a certain price level.

Q: What are the strike prices used in this bull put spread strategy?

The strategy involves selling the 290 put option and buying the 285 put option for Docusign stock.

Q: How much option premium can the trader receive from this bull put spread?

The spread was trading for around $1.65, which means the trader receives $165 in option premium for the trade.

Q: What is the maximum risk for this bull put spread strategy?

The maximum risk is approximately $335, which represents the potential loss if the stock closes below $285 on the expiration date.

Summary & Key Takeaways

• Docusign is displaying impressive relative strength, with high ratings in RS, composite, and EPS.

• The stock recently broke out above resistance to reach a new high.

• Traders can execute a bull put spread strategy to take advantage of the stock's continued strength.