MARA Bullish Play With Option Debit Call Spread

MARA shares have been in a steady uptrend since 07 December 2023, based on MARA moving averages. It has been trading above the 50-day MA period for more than 30 trading period. We have experienced a crossover about 10 trading days ago.

MARA implied volatility (IV) is 143.9, which is in the 83% percentile rank. This means that 83% of the time the IV was lower in the last year than the current level. The current IV (143.9) is -2.1% below its 20 day moving average (147.0) indicating implied volatility is trending lower.

The implied volatility skew shows the market's bias for pricing in volatility risk to the option premium of downside puts and upside calls.

The implied volatility for downside puts is decreasing relative to upside calls, this suggest that the market is pricing in for more upside.

The Current Skew Indicator show Slightly Bullish, but I believe we should be seeing more upside as MARA is one of the beneficial of the approval of Spot Bitcoin ETFs.

I decided to go for Debit Call spread instead to maximize the gain and also to reduce the risks.

Currently, MARA last price is $25.63, I will be using this contract that expiration date is 36 days away on 16 Feb 2024, I will make one leg to buy a call on the $26 strike for $4.35.

I will add another leg - sell a call at $31 strike for $3.20.

The initial cost of the Debit Call strategy would be $1.15 ($4.35-$3.20). In order for me to make a profit from this strategy, the stock price would need to move higher than $27.15 which is calculated from long strike ($26) plus cost of the spread ($1.15).

My maximum gain would be realized if the stock moves above the $31 strike. Hence, my call spread would be worth $5 and my cost was $1.15 This will net me a profit of $3.85.

Based on how the correlation for Bitcoin and MARA have been, MARA would be benefitting from any movement of Bitcoin, and with the Spot Bitcoin ETF, though it is slowly gaining popularity, investors would look at MARA the same way as they would for Spot Bitcoin ETF.

Those investors who are hesitating to go into the newly approved Spot Bitcoin ETFs, would look at some of the more promising crypto stocks.

Appreciate if you could share your thoughts in the comment section whether you think MARA prices would be able to hit $31 dollar, with one month of trading for Spot Bitcoin ETFs, provided that they start offering to trade by 16 Jan 2024.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.