tech
Adobe Continues to Struggle. This Options Trade Doubles Down on a Potential Rebound
Options trader Nishant Pant revisits this bull call spread.
TL;DR
- Adobe (ADBE) stock experienced a secondary dip, presenting a new opportunity for a bull call spread trade.
- The Relative Strength Index (RSI) has moved below 30 into oversold territory and has since crossed back above 30, signaling potential buyer control.
- The Directional Movement Index (DMI) shows early stages of a shift, with directional lines pivoting, indicating a potential loss of selling pressure and gain in buying momentum.
- The recommended trade is an ADBE 235-240 bull call spread expiring May 8, with a cost of approximately $2.50.
- This strategy allows for 'averaging down' by entering at lower strikes, mitigating concentration risk and aiming for a 100% profit if the stock moves above $240 by expiration.