Credit put spread analysis · · Good setup
Recommended credit put spread
AI-suggested setup based on the latest screen. Expiration Jun 25, 2026.
- Width
- $10.00
- Estimated credit
- $0.13
- Max risk
- $9.87
- Return on risk
- 1.3%
- Expiration
- Jun 25, 2026
For entertainment purposes only. Not a recommendation to trade. Disclaimer.
Earlier analyses
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Analyzing MELI after a sharp -12.7% drop to $1578.78. The stock is still up 7.5% over two months, indicating the recent sell-off is a pullback within a broader uptrend (Trend: 68%). The high Implied Volatility (IV) of 51…
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MELI presents a challenging but potentially opportunistic setup after a sharp -12.70% single-day drop. The stock at $1557.30 is still up 7.5% over two months, indicating the broader trend remains intact despite the sell-…
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Analyzing MELI after a sharp -12.96% single-day drop presents a classic 'oversold bounce' scenario for a credit put spread. The stock at $1627.66 is still up 7.5% over two months, indicating the long-term trend (68%) rem…
AI analysis
Options Trading Expert · May 12, 2026
MELI's sharp -12. 70% drop presents a compelling, albeit aggressive, credit put spread opportunity. The stock is still up 7.
5% over two months, indicating the broader trend remains intact despite the single-day sell-off. The high IV of 96% is a double-edged sword: it provides excellent premium for sellers, but also reflects significant expected volatility and risk. The Safety score of 8/9 is a strong positive, suggesting fundamental resilience.
For a moderately aggressive trader, this is a reasonable setup to lean into. The key is structuring the spread to capture sufficient premium relative to the risk. A 5-7% OTM short put aligns with the 'getting paid for risk' philosophy.
The calculated strikes below provide a credit-to-width ratio well above the 0. 25 hard floor, making the risk/reward mathematically sound. The primary concern is the lack of a reversal signal; the stock could continue lower, testing the short strike.
However, given the high premium, strong safety score, and the trader's moderately aggressive mandate, this warrants an OPEN with careful strike selection.