If you agree that PGR will struggle with its 20-day moving average (blue line in chart) line in chart), consider the following trade that relies on the stock remaining below 92.5 (red line in chart) (through expiration in five weeks. Buy to Open PGR 19Nov 95 call (PGR211119C95)
Sell to Open PGR 19Nov 92.5 call (PGR211119C92.5) for a credit of $0.80 (selling a vertical) This credit is $0.05 less than the mid-point of the option spread when PGR was trading at $91.25. Unless the stock falls quickly from here, you should be able to get close to this amount. Your commission on this trade will be only $1.30 per spread. Each spread would then yield $78.70. This trade reduces your buying power by $250 and makes your net investment $171.30 ($250 – $78.70). If PGR closes below $92.50 on November 19, both options will expire worthless and your return on the spread would be 46% ($78.70/$171.30).
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