Like most stocks Home Depot (HD) has taken a bit of a beating lately. Since late January, the stock has declined from $205 down to $178, a drop of over 13%.

However, the stock is holding above the key $175 level and also above the rising 200 day moving average which sits around $167.

Traders who believe the decline has run its course can achieve high returns via a bull put spread.

One trading opportunity for those traders with a bullish bias is a Bull Put Spread using the $167.50 strike as the short put and the $162.50 strike as the long put.

As of March 20th, this trade offered a 9.65% return on risk over the next 30 calendar days when using the April 20th expiry.

The 200 day moving average is currently around $167, and this could provide support on any further decline, so this trade represents a good risk / reward for those betting that HD will stay above this line in the sand.

The maximum profit on the trade would be $44 per contract with a maximum risk of $456. The spread would achieve the maximum 9.65% profit if HD closes above $167.50 on April 20th in which case the entire spread would expire worthless allowing the premium seller to keep the $44 option premium.

The maximum loss would occur if HD closes below $162.50 on April 20th which would see the premium seller lose $456 on the trade.

The breakeven point for the Bull Put Spread is $167.06 which is calculated as $167.50 less the $0.44 option premium per contract. Keep in mind that due to the bid-ask spread, you may not be able to get filled at these prices.

Looking at the chart, HD is holding above the key $175 level and MACD is deeply oversold and looking like it wants to turn higher.

The RSI indicator is at 42.23 which represents a good buying opportunity.

Home Depot is currently above the 200 day moving average but below the 50 day. The 50 day moving average is above the 200 day moving average which is generally considered a bullish sign. However, the 50 day moving average is declining.

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