BotTrigger Trade Alert: $ISRG we've placed a GTC (good till cancelled) limit order to buy the July 2019 $480 / $500 vertical call spread @ $10.00 even.
MAX VALUE = $20 which is a 100% gain so long as $ISRG's share price closes @ $500 or greater than UPON the expiration which is July 19th of this year (171 days out from today).
BREAKEVEN = ISRG's share price $ 490 upon expiration and
MAX LOSS = occurs if ISRG's share price closes @ $480 or less than UPON expiration.
Just yesterday Intuitive Surgical just released their earnings which caused a -8% pullback yesterday alone. With earnings now behind us, $ISRG continued a bit lower filling a naked gap that was open around the mid $480 area, not coincidentally hitting the Fibonacci 50% retracement level.
So today, ISRG hit the 50% FRZ (Fib Retracement Zone). Statistically the most common retracements that consistently get pulled-back to in Fibonacci analysis is any where from the 38.20% - 61.8% zone AKA “FRZ” = FIBONACCI RETRACEMENT ZONE. When a stock is a confirmed uptrend, this zone gets hit on almost every near to intermediate term time frame over & over again while the stock stair-steps higher.
Considering the strength of the counter rally that that has occurred off the $430 trough lows to the peak of $540 in just 17 trading days...the window for our entry might be a tight one, in that ISRG could just easily bottom right around the present area and be on it's merry way higher. However, if we do get a pullback to the 61.8% FIB retarcement level then our limit order will be there to exploit the discounted opportunity....and we should easily get filled at our $10.00 bid. Again what's especially beautiful about this trade is that ISRG merely needs to be be no more than 1.5% above it's current share price & we would stand to make a 100% gain so long as ISRG's' share price is merely above the $500 level.
First we have to get filled...so let's see if we can get a little more downage from the current area...anywhere from the mid to high $470's and we should get filled @ the Bid.
HOW TO CALCULATE THE MAX GAIN, BREAK EVEN, & MAX LOSS ON VERTICAL CALL SPREADS
MAX VALUE OCCURS ONLY IF:
You determine the MAX VALUE that can be achieved by simply subtracting the distance from the higher strike to the lower strike.
For example, in this case where we are targeting the Intuitive Surgical $ISRG 2019 July $480 / $500 vertical call spread ... the distance between those 2 strikes is $20 dollars ($500 - minus $480 = $20).
So if we were to get filled @ $10 then that means our $10 position will be worth $20 so long as ISRG's share price is @ or above the higher strike of $500 by & UPON expiration.
BREAKEVEN OCCURS ONLY IF:
BREAKEVEN is determined by your entry price / "cost basis" + the lower strike. So if we get filled @ $10.00 then our BREAKEVEN VALUE = $480 ( lower strike) + $10 (cost basis) = $490 per share. Anything below $490 UPON expiration and the value of your vertical call spread depreciates.
MAX LOSS OCCURS ONLY IF:
MAX LOSS is very simply the lower strike of said position. So in the case of the example mentioned above, if ISRG's share price were to close @ or lower than $480 UPON expiration ...then the value of this call spread would be worth $0.00