$ADBE Options Intelligence

🎯 SELL ADBE DEC 19 350/360 CALL SPREAD

I recommend a bear call spread because Adobe’s current market conditions show bearish technical signals and elevated implied volatility (IV), favoring premium selling strategies. The term structure reveals that near-term options are overpriced relative to historical volatility, with a 30-day Clean IV around 41.4% versus a baseline 90-day historical volatility of 26.4%, indicating a strong premium to collect. Additionally, the stock is trading below its 20-day and 50-day moving averages and has bearish momentum indicators (RSI ~41.5, MACD bearish). Analysts have recently downgraded price targets, and market sentiment is bearish with a price forecast suggesting downside toward $276 by mid-December. The next earnings event on December 10, 2025, is just before this expiration, so selling premium after earnings avoids earnings volatility risk.

Sell ADBE Dec 19 350/360 Call Spread
Stock Price: $330.81 | Entry: Sell 350 Call at ~$8.20 bid, Buy 360 Call at ~$5.00 ask → Net Credit ≈ $3.20

📊 Trade Metrics

• Max Profit: $320 per spread (net credit received)
• Max Risk: $680 per spread (difference between strikes $10 minus credit $3.20)
• Breakeven at Expiry: $353.20 (350 strike + $3.20 credit)
• Win Probability: Moderate to high, as stock is ~20 points below short strike
• Days to Expiration: 32 (Dec 19, 2025)
• Theta: Positive (benefits from time decay)
• Vega: Negative (benefits if IV contracts post-earnings)

📈 Term Structure & Volatility Analysis

• Baseline 90-day Volatility: 26.4%
• 30-day Clean IV (Dec 19 expiry): 41.4% (15% above baseline = strong sell premium signal)
• Market IV Rank: 100% (very high, favors selling premium)
• Earnings Multiplier: 3.31x (high expected move priced in for earnings on Dec 10)
• Calendar Spread Opportunity: Yes, significant IV drop expected post earnings, favoring selling near-term premium

📈 Greeks & Volatility

• Delta (350 Call short leg): ~0.50 (ATM)
• Delta (360 Call long leg): ~0.30 (slightly OTM)
• Net Delta: Slightly negative, aligns with bearish bias
• Theta: Positive, decay helps position profitability
• Vega: Negative, benefits from IV contraction after earnings

🎯 Why This Trade

The term structure and volatility environment strongly favor selling premium due to elevated IV and a high earnings volatility multiplier. Adobe’s technicals show bearish momentum with price below key moving averages and RSI indicating no oversold bounce yet. Analyst downgrades and bearish sentiment reinforce downside risk. The stock’s current price of $330.81 is well below the 350 strike, providing a comfortable buffer. Selling the Dec 19 350/360 call spread collects rich premium while capping risk. This trade avoids the earnings event by expiring after Dec 10, capturing potential IV crush and time decay benefits. The expected daily move (~±$8.99) supports the strike choice, as the stock would need a strong rally above 353.20 to cause loss.

📊 Pro Analysis

• Current IV: 43.2% (vs 9.3% historical) → Overpriced options
• Put/Call Volume Ratio: 0.29 (very bullish on calls, but IV skew and fundamentals favor selling premium)
• Max Pain: $390 (far above current price, unlikely to pin near term)
• Technical: RSI 41.45 (neutral to bearish), MACD bearish, price below 20/50/200 MAs
• Fundamentals: EPS $16.08, profit margin 30%, but stock down 24% YTD and near 52-week lows
• Market Sentiment: Bearish, with price forecasts suggesting further downside

🔍 Earnings Date Check

Earnings on 2025-12-10; Dec 19 expiry is AFTER earnings, suitable for capturing post-earnings IV contraction.

💡 Trade Management

• Entry: Place limit order to SELL 350 Call at $8.20 (bid), BUY 360 Call at $5.00 (ask), net credit $3.20
• Target: Close position at ~50% of max profit ($1.60) or if stock rallies above $353
• Stop: Exit if stock price moves above $360 before expiration
• Time Stop: Close 2 days before expiration to avoid last-minute gamma risk

🔒 Pricing Validation

• 350 Call intrinsic value: $0 (OTM)
• 360 Call intrinsic value: $0 (OTM)
• Spread max intrinsic: $0 (stock below 350)
• Spread price: Credit $3.20, valid as > intrinsic and bid/ask aligned
• Put-Call Parity holds within tolerance

🔍 Market Overview

The market is in a cautious phase with elevated volatility ahead of the Fed rate decision and CPI on Dec 10, coinciding with Adobe’s earnings. The tech sector shows mixed signals but Adobe’s recent downgrades and bearish technicals weigh on the stock. The stock is near 52-week lows (~$323) but has resistance at 350 and 360 strikes. The broader market is digesting macro risks, making defined-risk credit spreads an attractive approach to generate income without excessive directional risk.

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Confidence Level: Moderate to High — based on strong IV premium, bearish technicals, and fundamental downgrades. Risk is limited by spread width. The main risk is a sharp post-earnings rally above 360, which is less likely given current sentiment but must be monitored.

Risk Assessment: Max risk $680 per spread if ADBE closes above 360 at expiration. Position size accordingly to risk tolerance. Defined risk spread limits downside while collecting substantial premium in a high IV environment.

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This trade leverages the elevated IV and bearish outlook to sell premium with defined risk, aligning well with current market conditions for ADBE at $330.81.