🎯 Affirm HoldingsOptions Strategy: Bull Call Spread (Debit Spread)
- Underlying: AFRM
- View: Cautiously optimistic; expecting a continuation of the bullish momentum towards resistance, but with awareness of extreme short-term overbought conditions (RSI 93.3) suggesting potential for consolidation/pullback before further upside.
- Strategy Type: Bullish Debit Spread / Directional with Defined Risk
- Option Contract Portfolio:
- Buy 1 AFRM May 15, 2026 $68.00 Call @ $2.83 (Mid-Price)
- Sell 1 AFRM May 15, 2026 $72.00 Call @ $1.18 (Mid-Price)
- Max Gain & Loss: Max Gain = $1.35 ($132 per spread), Max Loss = $1.65 ($165 per spread)
- Initial Cost/Credit: Net Debit of ~$1.65 per spread.
- Greek Exposure (Simulated):
- Delta: ~+0.25 (Moderate positive directional exposure)
- Theta: ~+0.01 (Slightly positive, benefits from time decay on the short leg)
- Vega: ~-0.05 (Slightly negative, minor sensitivity to IV crush)
- Gamma: ~0.02
- Rho: ~0.01
- Rationale: This strategy aligns with the bullish view while mitigating the high cost and Vega risk associated with buying outright calls in a high IV (~91%) environment. The short call at $72 helps finance the long call, reducing the net debit and lowering the break-even point ($69.65). It provides positive Delta for upside participation while offering a positive Theta profile, which is beneficial if the stock consolidates. Profit is maximized if AFRM is above $72 at expiration, capturing the move toward the $71.89 resistance and potentially higher. Risk is strictly limited to the initial debit.
- Time Frame: Short-Term (Expiration: May 15, 2026, ~24 days)
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