SMH, the semi-conductor ETF, almost made a new all-time high on Monday, but couldn’t quite match the existing one from March ’18. The bullishness about a US-China trade deal has pushed it up over 6.6% in the last week and a half due to the majority of chipmaker business is in either or both countries. But that’s putting a lot of faith in a deal that could either fail before it happens or be just a political statement without much substance. If you think that the likelihood of a weak US-China deal is more likely than the strong one that SMH is pricing in, you might consider a bearish trade in it. The long put vertical that’s short the 110.5 put and long the 112.5 put in the May weekly expiration with 44 DTE is a bearish strategy that has a 52% prob of profit and generates $.14 of positive daily theta.
Opened 19/04/10 for $.84 debit
Closed 19/04/25 for $.90 credit