I just executed a ratio spread on Bloom Energy (BE) that shows how I approach high implied volatility opportunities — and I wanted to walk you through exactly what I did and why.
This setup also fits into a broader theme I’ve been watching in the energy space. BE has been trading in a wide range that looks a lot like what we’ve seen in names like Chevron (CVX) and ExxonMobil (XOM), which makes it an ideal candidate for a structure that takes advantage of overstretched premiums.
This isn’t just about collecting premium. It’s about creating multiple ways to win while building in a repair strategy from the start, and positioning for potential ownership at levels that make fundamental sense.
The Trade Structure and Profit Zones
I sold one put at $135, two more puts at $120, and bought one put at $115, going out 44 days to April 24, collecting around $2.60 in credit for the entire position.
This creates a $1,500 profit trap between $120 and $135, with maximum profit if BE stays above $135. With BE trading around $160, that gives me plenty of room.
There’s also an 85% to 90% probability of profit at entry, which is the kind of environment where ratio spreads shine. When premiums are this elevated, the structure lets me harvest that froth without overcommitting capital up front.
If the stock pushes lower, that’s where the second benefit of the structure shows up — I’d be assigned shares at a big-time discounted level. My effective break-even lands at $102.50 per share after factoring in the credit. Owning BE down there would mean stepping into a position after a roughly 36% decline from current levels.
Why the Ratio Spread Works Here
The ratio spread gives me flexibility. I can profit if the stock stays elevated, stalls in its range or even fades meaningfully. It’s a structure built for environments where premiums are fat enough that even the repair path pays well.
With BE, at-the-money covered calls can pull in around $20 to $25 in premium, which is unusually rich for a stock in this range and makes any potential assignment far easier to work off.
This is also why I wasn’t worried about assignment from the start. If I do get shares, the repair is straightforward. I’d sell seven- to 14-day covered calls at or near the money, targeting $250 to $500 per cycle.
Between the discount on ownership and the strength of short-term premiums, repairing the position becomes a logical wheel-like continuation of the trade rather than a setback.
The timing was intentional. I wanted enough duration to capture premium while avoiding the volatility of an earnings event. The 44 days gives me the window to manage the position, adjust if needed or take assignment on my terms.
I’ll see you in the markets.
Chris Pulver
Chris Pulver Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
P.S. 1 Weird Trade Would Have Doubled a Stake 31 Times in 2025 Alone…
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We develop strategies to the best of our ability, but we cannot guarantee a future return. There is always a risk of loss when trading. Past performance is not indicative of future results. The results shown are from a 237-trade backtest from 1/1/20 – 1/1/26. The result was a 70% win rate, 40% average return (winners and losers), with a 7-day hold time.
