Credit put spread analysis · · Moderate setup
Earlier analyses
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The stock has experienced a dramatic 105.9% surge over two months, culminating in a sharp -6.87% drop yesterday. While this volatility creates potential for a credit put spread, the overall setup is weak. The Safety scor…
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The setup is weak and warrants a PASS. While the stock's 6.87% drop creates a potential entry point for a credit put spread, the overall context is highly unfavorable. The stock has surged over 105% in just two months, i…
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The setup is weak and does not meet the required criteria for a moderately aggressive entry. While the stock's 6.87% drop creates a potential volatility crush opportunity, the underlying conditions are highly unfavorable…
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The recent -6.94% drop in STX presents a strong opportunity for a credit put spread. The stock remains up 44.5% over the past 2 months, and with a trend of 70% and safety rating of 6/9, it shows strength despite the rece…
AI analysis
Options Trading Expert · May 20, 2026
The AI's notes below mention opening a position, but the rating (3.2/5) sits below our public-display threshold of 3.5/5, so this setup is marked Hold rather than as a tradable idea.
Analyzing STX at $810. 46 after a sharp -6. 87% drop.
The stock is up over 105% in two months, indicating an extremely strong but potentially overextended uptrend. The Trend score of 95% confirms this momentum, but the Safety score of 5/9 is mediocre, and the high IV of 76% suggests elevated fear and premium. The lack of a reversal signal is a positive for a bullish put spread, as it implies the drop may be a pullback within the trend rather than the start of a major reversal.
However, the magnitude of the recent run-up creates significant risk of a deeper correction. A credit put spread can capitalize on the high IV and the expectation that the uptrend will resume or at least stabilize. For a moderately aggressive temperament, this is a decent, albeit risky, setup.
The high IV allows for a good credit relative to risk. Using the 2026-06-26 expiration, a realistic structure is to sell a put 5-7% out-of-the-money. A $795 strike is approximately 1.
9% below current, which is too close. A more appropriate 5% OTM strike is around $770. A $5 wide spread provides manageable risk.
The estimated credit of $1. 50 meets the critical 0. 25 floor (credit/width = 0.
30). The primary concern is the explosive prior rally; a failure here could lead to a swift move through our short strike. The decent premium for the risk makes this a viable, moderate-conviction play, but it is not a high-confidence setup given the extended price action.