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On 23 Jan, I did a technical analysis and have the outlook that $Palo Alto Networks(PANW)$ is currently bullish and price may stay above $170 before the earning announcement on 25 Feb 2025. Therefore, I have opened a Bull Put Spread with strikes $165/$170, date of expiry 28 Feb 2025, for credit of $0.98. I’ll get to keep the credit if price stays above $170 on 25 Feb 2025. The total risk of this trade is $4.02 ($5 spread – $0.98 credit received), which is approx. 1% of my total capital.

Technical analysis for PANW

Screenshot of my position captured on 25 Jan 2025

Here are my considerations for entering this trade as well as my plans to take care of my risk and rewards:

1.      Forming my outlook:

• Price starts to swing up on 14 Jan 2025, and moving above 200 moving average and 150 moving average for the next few days. This gives me a bullish outlook for PANW.

2.      Taking care of my risk:

• On the day of opening, William%R was at oversold region. This suggest that price may move down in the coming days.b. If price does moves down, I think 21 exponential moving average, 150 moving average and 200 moving average are potential levels of supports.

• I plan to close the trade and cut loss if price drops below $170.

• I plan to close the trade before earning announcement on 25 Feb.

3.      Taking care of my reward:

• If the trade has achieved 50% of the credit before 14 Feb (Its valentine’s day 😊), I’ll close the trade.

• If the trade has achieved 70%-80%, I’ll close the trade too.

Analysing the Bull Put Spread. (Screenshot taken on 25 Jan)

In summary, I took a bullish outlook on PANW, entered using Bull Put Spread and also shared my trade plan.

Comment below if you have any queries. Feel free to share with me if you have a stock in mind and like to use options for your trades. I may write an article of your stock for discussion and education within this community.

Happy trading 😊.