$UPS Options Intelligence

🎯 SELL UPS 2025-12-05 95/100 CALL VERTICAL SPREAD

I recommend a bear call spread for UPS expiring today (Dec 5, 2025) because the short-term implied volatility is very high (IV Rank 100%), indicating options are overpriced, which favors selling premium. UPS is trading near $95.19, slightly below the 200-day moving average ($96.62), with bearish MACD and neutral RSI, and the stock has recently faced operational challenges and downward analyst price target revisions, suggesting limited upside near term[1][2][4]. Selling premium into high IV with a bearish technical setup is prudent.

Trade Details:

• Sell 1 UPS Dec 5 95 Call (ATM strike near current price)
• Buy 1 UPS Dec 5 100 Call (5 points above)
• Stock Price: $95.19
• Entry: Sell 95 Call at approx. $0.004 bid, Buy 100 Call at approx. $0.00 ask (very cheap, near zero)
• Credit: Approx. $0.40 - $0.50 net credit (estimate based on typical bid/ask spreads and IV)

📊 Trade Metrics:

• Max Profit: ~ $50 per spread (credit received)
• Max Risk: $500 (difference between strikes $5 minus credit)
• Breakeven: 95 + credit received (~$95.40 to $95.50)
• Probability of Profit: High, given bearish technicals and high IV favoring premium decay
• Days to Expiration: 0 (expires today)

📈 Term Structure & Volatility Analysis

• Baseline 90-day Volatility: 27.5%
• Current IV Rank: 100% (very elevated)
• Short-term IV is expensive, favoring premium selling strategies
• No earnings until Jan 29, 2026, so no immediate event risk after expiration
• Market Maker Max Pain at $100, close to upper strike, which supports resistance near $100

📈 Greeks & Volatility

• Delta on short 95 call: approx. 0.5 (ATM)
• Theta: Strong positive for seller due to day-of-expiry decay
• Vega: Seller benefits from IV contraction post-expiration
• Put/Call Volume Ratio: 0.04 (very bullish call buying), but this can inflate call premiums, good for selling

🎯 Why This Trade

The term structure shows extremely elevated short-term IV (IV Rank 100%) making selling premium attractive. UPS faces operational headwinds, recent price declines, and is below its 200-day MA with bearish MACD, indicating limited upside over the next day. The Max Pain at $100 strike aligns with the upper call strike, suggesting resistance there. Selling the 95/100 call spread captures premium decay with defined risk, fitting the current market conditions and technicals. The expected daily move ±$2.14 supports the 5-point spread width as reasonable risk.

📊 Pro Analysis

• Current IV 35.7% vs historical 6.4%, heavily overpriced short term
• RSI neutral at 53.96, MACD bearish, price below 200-day MA
• Dividend yield 6.89% supports some downside protection in stock
• Sector peers (FDX, AMZN) mixed but UPS under pressure from job cuts and Amazon contract end
• Analyst sentiment mixed with recent price target cuts but some buy ratings remain

🔍 Earnings Date Check

• Next earnings on 2026-01-29
• Recommended expiration 2025-12-05 is BEFORE earnings, appropriate here as this is a short-term trade to capture premium decay, not earnings volatility

💡 Trade Management

• Enter limit order to sell the 95 call and buy the 100 call for a net credit around $0.40-$0.50
• Target to close at 50-70% of max profit if UPS remains below $95
• Stop loss: Close if UPS rallies above $97 to limit risk
• Close position by market close today to avoid assignment risk

🔒 Pricing Validation

• 95 Call intrinsic value: approx. $0.19 (95.19 - 95), trading at $0.004 bid (very close to intrinsic, low extrinsic value as expiration is today)
• 100 Call intrinsic: $0 (OTM), trading near zero
• Spread max loss = $5 - credit received, consistent with pricing logic

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Market Overview

UPS is under pressure from operational restructuring (job cuts, facility closures), revenue declines, and mixed analyst sentiment with price targets ranging $81 to $120. The stock trades just above the 50-day MA ($90.78) but below the 200-day MA ($96.62), with bearish momentum indicators. The high dividend yield of 6.89% may provide some support. Sector peers like FDX and AMZN show volatility, but UPS’s recent challenges and a 22% YTD decline suggest caution. The Fed’s upcoming rate decision and CPI release in 5 days could influence broader market sentiment but not this very short-term trade. The high IV and Max Pain level near $100 support selling premium with a bearish bias into expiration.

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This trade offers defined risk, high probability, and benefits from the very elevated short-term IV and technical resistance near current levels, making it the best options trade for UPS today at $95.19.