MM82 - MSL Put Spread Analysis

Today I want to touch on something that has come up in Kilo Club a few times this week: modified synthetic longs, and specifically how I select the put spreads. This is not financial advice. I am not a CPA and I am not a trading advisor. Let's get into it, and let's talk about Broadcom.

I have been trading Broadcom stock in and out all summer, but I still have not built my long-term position. Why? Because I have been patiently waiting for this lower trading range. I started talking about it months and months ago, and this week, for the first time, we finally broke back into it. We are now trading below all the moving averages, which if you watched MM81 you know is when you exercise patience and caution.  

So why did I open a modified synthetic long here instead of a full synthetic long? Because I am not convinced I have found the perfect bottom yet. The modified synthetic long gives me levers to pull. It lets me adjust the position into a more ideal structure later if I need to, and that flexibility is the whole point. That was step one.

Step two was the entry itself. I had my trading range marked off on the chart for a long time, and I said my next entry level would be 315 to 325. Now, you are going to say, wait, it only came down to 335 this week, so why did you enter on a divergence off the four hour? Because close enough was good enough. I trust the structure, and I trust my ability to roll, repair, and adjust a modified synthetic long, so I do not have to be perfect. It is very hard to be perfect in trading. You need wiggle room, and this strategy gives me exactly that.

Which brings me to the part everyone actually asked about: how do I pick the put spread?