The March 2 setup on Lumentum Holdings Inc (LITE) delivered exactly as planned, with price exhausting after a vertical extension and failing to continue higher.
Following several weeks of aggressive upside momentum, LITE reached a technically stretched zone near multi-timeframe resistance. Momentum indicators were already beginning to roll over, and the structure suggested a high-probability post-extension compression into weekly expiration.
That scenario played out almost perfectly.
Price briefly pushed higher early in the week but quickly lost momentum. Selling pressure gradually emerged, and the stock transitioned from extension into mild retracement. By Friday’s close, LITE had moved significantly lower and both options expired safely out-of-the-money, allowing full premium capture.
The 890/895 Bear Call Spread never came under meaningful pressure, demonstrating once again how 10-delta positioning provides sufficient buffer even when the underlying initially attempts to continue higher.
By expiration on March 6, the entire premium was realized.
Trade Recap
Structure: Bear Call Spread
Expiration: Mar 06, 2026
Short Call: 890C (10 delta)
Long Call: 895C
Contracts: 16
Credit Received: $432
Broker Fees: –$2
Net P/L: +$430
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Post-mortem
This trade followed the exact playbook of post-extension premium capture using 10-delta positioning.
→ LITE had experienced a multi-week vertical move, pushing price far above the EMA cluster and into resistance.
→ Momentum began decelerating, with MACD histogram rolling over and RSI losing strength.
→ The 890 short strike sat well above the active price structure, leaving substantial room for normal volatility.
→ As the week progressed, price failed to sustain upside continuation, transitioning instead into a controlled pullback.
By expiration, LITE closed far below the short strike, allowing the spread to expire worthless and capture 100% of the premium.
When extended trends begin to stall near resistance, 10-delta Bear Call Spreads remain one of the most reliable structures for harvesting time decay while maintaining clearly defined risk.
Disclaimer
All content is for informational purposes only and does not constitute financial advice.Any trades or strategies should be tested in a simulated environment before use.Trading involves risk, and all decisions are the sole responsibility of the reader.