This article and the views within are from trader Nic Chahine. This article is only available to Benzinga Premium subscribers.
The Thesis: ARK Innovation ETF ARKK is showing a tactical opportunity. It is worth holding a bullish setup. Tactical means TRADE not INVESTMENT. So I am putting on a smaller size and fast stop loss levels.
The Trade: I prefer taking risk that doesn’t need a rally to win. In this case it is selling a credit put spread
- Sell April 1st $49 put (mark $0.86)
- Buy April 1st $48 put (mark $0.71)
The net credit is $0.15
I don’t need a rally to win
I would stop out if price falls below $56
Alternate Trade: This one requires a rally to win.
- Buy April 14th $60 call; Cost is -3.95 (mark)
This trade yields the fastest win, but also would lose fastest
This trade needs a rally to win
I would stop out if price falls below $56 or lose -30%
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