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Trade of the Week – Long put on MQG

April 6, 2022

Trade of the Week – Long put on MQG

Macquarie Group Limited (MQG) has had a strong run since 8th March 2022 towards its current share price around $204.50. However, the stock has started to slow down as it feels resistance around $207 to $208.

Macquarie Group Limited (MQG) has had a strong run since 8th March 2022 towards its current share price around $204.50. However, the stock has started to slow down as it feels resistance around $207 to $208.

While there is a chance that the stock may break through this resistance level, the next resistance level is around the all-time high of $217.32, roughly $10 higher. If the market pulls back however, a major support level is as far down as $190, then $180. If the stock was able to push through this $207 resistance level with ease, I would be more bullish on the stock’s ability to hit all-time highs over the short term. However, price action has been stuck at this level for the past week, which is often a sign the stock is due for a pullback (which may be starting this morning).

Source: Implied Volatility

A long put has been selected as it’s a bearish strategy and will benefit from an uptick in implied volatility if the market pulls back quickly and significantly. 

Source: Implied Volatility

We will set the strike price of the long American put to $204.00 with an expiry on 21st April 2022. This is a short-term dated option with the purpose of capitalising on a quick market move over the next two weeks. By trading an American-style option, we can make the most of beneficial downward movements prior to the expiry date.

Source: Implied Volatility

The breakeven point is around $200.05. Maximum loss is the upfront premium paid to enter into the position. You could consider closing the position if the market quickly moves to the $200 level. If you are more bearish on the stock, you could hold until $190, or even down to $180.

If you would like some more information on our LITT Trading strategy, call 1300 805 795.

For further information on using the Implied Volatility platform you can follow this link, here.

To try trading for yourself using the most powerful Options Trading technology in Australia, click here for a trial for our Implied Volatility platform

We wish you good luck with your trading, and as always if you have any questions, please feel free to contact our trading desk on (03) 8080 5795. Please note, we provide General Advice only. 

Past performance is not a reliable indicator of future performance. 

The opinions expressed in this article are our personal views. 

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Any advice provided by *Reach including on its website and by its representatives is general advice only and does not consider your personal objectives, financial situation or needs, and you should consider whether it’s appropriate for you. This might mean that you need to seek personal advice from a representative authorised to provide personal advice. Please click here https://reachmarkets.com.au/general-advice-warning/ to read our full general advice warning.


General Advice Warning

Any advice provided by Reach Markets including on its website and by its representatives is general advice only and does not consider your objectives, financial situation or needs, and you should consider whether it is appropriate for you. This might mean that you need to seek personal advice from a representative authorised to provide personal advice. If you are thinking about acquiring a financial product, you should consider our Financial Services Guide (FSG) including the Privacy Statement and any relevant Product Disclosure Statement or Prospectus (if one is available) to understand the features, risks and returns associated with the investment.

Please click here to read our full warning.

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