$ADBE Options Intelligence

🎯 BUY ADBE 2025-12-19 350/360 CALL SPREAD

I recommend this bull call spread because the term structure shows that December options have a relatively lower clean implied volatility (around 37.5%) compared to near-term expirations that are overpriced (clean IV above baseline 24% but closer to 40%+). The stock is currently at $352.73, supported by strong Q3 earnings and AI-driven growth catalysts, with analyst price targets as high as $500. The RSI near neutral (49.17) and price just below the 50-day MA ($356.64) suggest room to run higher without being overbought. The market’s strong bullish sentiment and heavy call buying, combined with a high put/call volume ratio of 0.26 (very bullish), support a moderately bullish directional trade with defined risk.

Buy ADBE Dec 19 350/360 Call Spread
Stock Price: $352.73 | Entry: approx. $4.00 debit (Ask 350 call ~$7.00, Bid 360 call ~$3.00)

📊 Trade Metrics

• Max Risk: $400 per spread (debit paid)
• Max Reward: $600 (difference between strikes $1,000 minus $400 debit)
• Breakeven at expiration: $354 (strike 350 + $4 debit)
• Win Rate: Moderate (delta ~0.45 for 350 call, lower for 360 call)
• Days to Expiration: 84 (post earnings on 2025-12-10)

📈 Term Structure & Volatility Analysis

• Baseline 90-day Volatility: 24.0%
• Clean IV Dec 19: ~37.5% (above baseline but cheaper than near-term expirations)
• Near-term IV (Sep/Oct): 32-41%, overpriced for selling premium
• Earnings Multiplier: 3.65x, indicating significant expected move around earnings (trade after earnings to avoid earnings IV crush)
• Calendar Opportunity: Favor buying longer-dated options post earnings to capture directional move with controlled risk

📈 Greeks & Volatility

• Delta (350 call): ~0.45 (moderately bullish)
• Theta: -0.10 to -0.15 per day (manageable with 3-month horizon)
• Vega: positive, benefits if volatility rises or stays stable post earnings
• IV Rank: 65% (above average, but December options relatively cheaper)
• Put/Call Volume Ratio: 0.26 (strong call buying, bullish sentiment)

🎯 Why This Trade

The term structure analysis shows near-term options are overpriced relative to historical volatility, making short-dated premium sales unattractive. December options, expiring after the next earnings report on 2025-12-10, offer a better risk/reward. Adobe’s recent Q3 earnings beat and AI product momentum (ARR growth, AI-first product ARR surpassing $250M) provide strong fundamental support. The stock’s technicals are neutral to bullish, with RSI near 49 and price near the 50-day MA, giving room for upside. Analyst upgrades and a $500 price target from DA Davidson reinforce a positive outlook. The bull call spread limits risk to the debit paid while allowing participation in a potential rally toward $360 or higher.

📊 Pro Analysis

• Current IV: 41.4% vs Historical: 39.1%
• IV Rank: 65% (favors defined risk, directional trades)
• Expected Daily Move: ±$9.19 (2.61%)
• Market Maker Max Pain: $400 (near the upper strike)
• Technical: RSI 49.17 (neutral), price near 50-day MA $356.64
• Sector: Tech peers strong, AI integration driving growth
• Fundamental: EPS $15.67, 30.4% profit margin, strong free cash flow

🔍 Earnings Date Check

Earnings on 2025-12-10 — recommended expiration 2025-12-19 is AFTER earnings, capturing the post-earnings move and avoiding earnings IV crush.

💡 Trade Management

• Entry: Limit order at $4.00 debit (midpoint between 350 call ask $7.00 and 360 call bid $3.00)
• Target: Close at $6.00+ (50%+ profit)
• Stop: Exit if ADBE drops below $340 (technical support zone)
• Time Stop: Close 3-5 days before expiration if target not met

🔒 Pricing Validation

• 350 Call intrinsic: max(0, 352.73 - 350) = $2.73, option trading at $7.00 ask (premium for time and volatility)
• 360 Call intrinsic: 0 (OTM), option bid $3.00
• Spread intrinsic value: $2.73 - $0 = $2.73, debit $4.00 > intrinsic, valid
• Put-call parity and bid-ask spreads consistent and reasonable

🔍 Market Overview

The Fed’s steady rate stance with hints of future cuts supports growth stocks like Adobe. The AI-driven digital media sector is outperforming, with Adobe leading due to strong AI integration in Creative Cloud and marketing products. The geopolitical backdrop (Israel strikes on Iran nuclear sites) introduces some market caution but tech’s fundamentals remain robust. Adobe’s price near 50-day MA and neutral RSI indicate a balanced technical setup with upside potential. The sector peers (MSFT, GOOGL, CRM) show mixed but generally positive momentum. No significant dividend impact (very low yield). Overall, the environment favors defined-risk bullish trades post earnings.

---

Confidence Level: Moderate-High. The trade balances bullish fundamentals and technicals with controlled risk via the call spread. The earnings date is respected, and the volatility term structure supports buying longer-dated calls rather than short-term premium sales. The risk is limited to the debit paid, with a reasonable reward if Adobe rallies toward $360+.