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Trade of the Week – Long Put on NAB

March 23, 2022

Trade of the Week – Long Put on NAB

The Big 4 banks are all lining up on significant resistance levels after a strong bullish run. This means there may be a sector-wide pullback on the horizon.

The Big 4 banks are all lining up on significant resistance levels after a strong bullish run. This means there may be a sector-wide pullback on the horizon.

Source: Implied Volatility

To take advantage of a potential sector-wide pull back, this week’s trade idea will be with NAB as it has had the strongest positive move and is the only major bank currently breaking above six-month highs. NAB has a current IV rank of 50, so for the sake of simplicity we will choose a long put option to benefit from this anticipated move downward. If the market moves down and volatility also spikes, the value of the put option will rise from both the direction and volatility.

Source: Implied Volatility

We will select an at-the-money put to benefit from any quick move. We will set the expiry date to 21st April 2022, which is 29 days to expiry.

Source: Implied Volatility

This trade will be a range trade with a quick move expected within the next seven trading days. With the IV rank at 50, time decay can be quite costly. Some potential upcoming support levels are approximately:

  • $30.30
  • $30.00
  • $29.50

Source: Implied Volatility

If NAB’s move towards these levels has not occurred by 1st April 2022, you may consider closing the position. If there is a quick move towards one of these levels and you see significant support forming, it may be time to close out the position.

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. 

Trading options is not suitable for everyone. There is a risk that you can lose more than the value of a trade or its underlying assets. You should only trade if you are confident that you fully understand what you are doing. From 5 October 2021, under Design and Distribution Obligations, anyone opening a trading account will be required to meet the Target Market Determination criteria of Phillip Capital and subject to an assessment the results of which will determine your eligibility for a trading account, for further information please see here.

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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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