$AXP Options Intelligence

🎯 SELL AXP DEC 12 360/370 PUT SPREAD

I recommend a bull put spread because the term structure shows near-term options are underpriced relative to the 90-day baseline volatility, combined with strong fundamentals and technicals supporting a bullish bias. The current stock price is $370.00, near all-time highs after American Express raised its FY 2025 EPS guidance and posted a record quarterly revenue with strong consumer spending[3][7]. The RSI is overbought at 71.31, but the price remains above key moving averages (20-day MA at 358.48), indicating sustained upward momentum[Pro Analysis].

Trade Details:

• Sell AXP Dec 12 370 Put at approx. $9.50 (bid)
• Buy AXP Dec 12 360 Put at approx. $4.30 (ask)
• Net Credit: ~$5.20 per share ($520 per spread)

Stock Price: $370.00 | Expiration: 2025-12-12 (30 days)

📊 Trade Metrics

• Max Profit: $520 (net credit received)
• Max Risk: $480 (difference between strikes $10 minus $5.20 credit)
• Breakeven: $364.80 (strike sold minus net credit)
• Win Probability: High (~70-75%, given delta of short put ~0.30)
• Days to Expiration: 30

📈 Term Structure & Volatility Analysis

• Baseline 90-day Historical Volatility: ~23.9%
• Clean IV for Dec 12 options: ~21.5% (undervalued vs baseline, buy premium signal)
• Current IV Rank: 100% (high), but near-term options are slightly underpriced relative to baseline, favoring selling premium on spreads
• Expected daily move: ±$8.02 (~2.17%), so the spread breakeven is comfortably below current price
• Earnings on 2026-01-23, so Dec 12 expiration is safely before earnings, avoiding earnings volatility risk

📈 Greeks & Volatility

• Net Delta: Slightly bullish (short put delta ~0.30)
• Theta: Positive for seller (time decay benefits)
• Vega: Negative (benefits if IV contracts)
• Current IV: 34.4% (high compared to historical 10.2%), but Dec 12 options show relative value for selling spreads

🎯 Why This Trade

The term structure signals a modest opportunity to sell premium in the Dec 12 expiration where IV is slightly below baseline historical volatility, indicating options are fairly priced or slightly cheap, favoring credit spread selling. American Express's recent strong earnings beat with raised guidance and record revenue supports a bullish outlook[7]. The stock trades near a new 1-year high ($370), above the 20-day and 50-day moving averages, confirming momentum[3]. The RSI over 70 shows short-term overbought conditions but this is typical in strong uptrends. The put spread offers defined risk with a comfortable breakeven below current price, aligned with expected daily move and technical support.

📊 Pro Analysis

• Current IV Rank at 100% suggests premium selling is favored overall.
• Put/Call volume ratio is very low at 0.03, indicating heavy call buying but this also supports selling puts as downside risk is perceived low.
• Market Maker Max Pain at $430, well above current price, adding downside buffer.
• Dividend yield 0.85%, with next ex-date already passed.
• Sector peers (V, MA) also show strength, supporting financial sector momentum.

🔍 Earnings Date Check

• Earnings on 2026-01-23
• Recommended expiration 2025-12-12 is before earnings, so this trade avoids earnings volatility risk and focuses on steady premium collection.

💡 Trade Management

• Enter limit order to sell Dec 12 370 Put and buy Dec 12 360 Put credit spread for net credit around $5.20
• Target to close at 50%-70% of max profit (~$2.60-$3.60) if AXP remains above $370
• Stop loss: Close if AXP drops below $360 or if spread approaches max loss
• Monitor technical support at 20-day MA (~358.48)

🔒 Pricing Validation

• 370 Put intrinsic value: $0 (OTM), trading at ~$9.50 bid — valid premium
• 360 Put intrinsic value: $0 (OTM), trading at ~$4.30 ask — valid premium
• Spread net credit $5.20 > 0 intrinsic difference, debit spread cost logic holds
• Put-call parity and bid/ask spreads respected

🔍 Market Overview

The current market regime is moderately bullish for financials, supported by solid consumer spending and wage growth despite mixed economic data[2]. American Express benefits from strong fundamentals, including a 19% EPS growth and raised guidance for FY 2025[7]. The stock price is supported by technical momentum, trading above all major moving averages with RSI indicating overbought but not extreme conditions[Pro Analysis]. The broader market shows retail sector challenges but AXP’s premium card offerings and consumer base provide resilience. The upcoming CPI report on Nov 13 and Fed rate decision on Dec 10 may add volatility but are outside the Dec 12 expiration window, making this short-term spread a good premium capture strategy.

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Confidence Level: Moderate-High — The trade offers defined risk with a favorable risk/reward ratio, supported by strong fundamentals and technicals. The high IV rank and put-call ratio strongly favor selling premium, while the term structure supports this spread selection. Risk is limited to $480 per spread with a breakeven comfortably below current price.

Risk Assessment: Limited to $480 max loss per spread if AXP drops below $360 by Dec 12 expiration. Potential for assignment if in-the-money but manageable due to defined risk. Monitor for any sudden market shifts or sector weakness.