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Options-strategy

Options Idea: Buy The Jan. 21, 2022 INTC 40.0 Call @ $13.90Intel just gapped down after its last earnings release as margins tightened from almost 60% last year to 53.3%. Trouble lies ahead as well since Intel’s 7-nanometer manufacturing is delayed which will give AMD a 6 month head start to eat away at Intel’s market share. Intel has responded by initiating a huge $10 billion stock repurchase program. This is in addition to the Oct 2019 repurchase program already in place, bring total repurchases to around $20 billion. Even though Intel is in trouble, we think there’s an opportunity for a longer-term play. Observe the historic Price/Sales ratio for Intel in the weekly view. We are buying today at 2.75. We’ve marked entries over the last few years at the 2.75 PS level. Every entry would have been successful over a 1 year holding period. The 50 week average on the PS ratio for Intel is 3.32. Nevertheless, we like to reduce risk with options, so we are not going long in Intel. We are buying a deep in the money LEAP call on Intel today at $13.90, which gives us unlimited profit potential above $53.90 and limits our losses below $40. Since this is such a long term LEAP call, we have 16 months (or 72 weeks) to sell monthly or weekly calls against this position. So while our current breakeven point is $53.90, we intend to lower our cost basis through the sale of out of the money shorter term calls. This is strategy is called the poor man’s covered call. The important point is that with a $53.90 breakeven, the lowest priced call we can sell is $54. If we sell a lower priced call and INTC were to rise too quickly, the trade could lose money. Selling next month or next week 15 delta out of the money calls should produce more than enough income to compensate us for the loss of dividends on this position and reduce our breakeven to $51, which is where Intel was trading today when we opened our long position. Our objectives for short call income generation against this position are as follows: Initial Objective: $2.90 (Extrinsic Option Premium), reduces breakeven point to $51 Secondary Objective: $4.55 (5 Quarters Dividends on 100 shares) Stretch Objective: $13.90 (100% of capital recovered) If we complete our initial objective we’ll have recovered our extrinsic option premium, giving us the benefit of going long in INTC at no additional cost. If we complete the secondary objective we’ll have not only recovered the option premium, but also generated 5 quarters of INTC’s $0.33 dividend, making our position equal to a long position in INTC, but at 20% of the capital outlay. And our final stretch objective is to recover $13.90 over the life of this call, recovering our capital early. Standard Exit : We exit the trade for a profit when the PS ratio on INTC approaches 4. Early Exit : We exit the trade for a profit as soon as INTC has recovered the 50-week moving average. 20-INTC-03 Opening Date: Sep 1, 2020 Expiration Date: January 21, 2022 DTE: 507 IV: 35.81% IV Percentile: 69% Odds of Winning: 32.60% (before selling short calls) Odds of Losing: 67.40% (before selling short calls) Win: > 53.90 @ Expiration (before selling short calls) Loss: < 53.90 @ Expiration (before selling short calls) Reg-T Margin: $0 (long position, uses $1390 cash) Chart Legend Green Area: 100% Win Zone. If we finish above or in the green area, we’ve made a profit on our call. This is a long call, so our potential gain is unlimited. Red Area: If we finish in this area we have a loss. The size of the red area is the size of our maximum loss. Since we’ve bought a call instead of gone long, we have no additional losses below $40. 1 standard deviation, 2 standard deviation, 3 standard deviation projections from Opening Date to Expiration Date are included. Follow us here on TradingView to get updates as we adjust this trade with the short calls we will be selling against this position.
NASDAQ:INTCLong
by OptionsCoach
10
ZM hits roofIn this chart we see a short term, broadening pattern called the megaphone. I have found that this pattern is usually accurate in predicting breakouts/ price movements. As shown in this hourly chart, ZM has been run along the top trend line , briefly crossed above, and is now headed back to support. If I were looking for a short term trade I would wait to see if the price is going to break the black line (today’s low and also a price level that saw some price support recently), at the 457 area. If it breaks below, I would take out a short term call with my first target being the second-from-the-bottom black line, the 449 area, and the next is in the 442 area. If i believed I had a high tolerance for unrealized losses, I would set a stop loss far below my buying price (up to 40 percent of buying price for options.) on the other hand, if I had a very small tolerance or unrealized losses, I would set my stop loss at about 5 percent below my buying price, enough to maybe see a profit but not enough to where a short term sell off would force me to sell prematurely. Feel free to leave comments and questions.
NASDAQ:ZMShort
by Isaiahgr3
4
Why I booked profit on my shorts today?Context : As I explained in my post earlier, I expected strong selling in the zone 11380-11630. Remember this zone is where the shock moves started happening in February 2020. I actually did not trade much in the zone, but I started shorting around the upper range of the zone - around 11600. About Trade : I have been positional short from Sept 13, I bought Oct 29 PUTs to give me more time. But NIFTY moved in the anticipated direction. When I am sitting on profit, it is important to protect my profits. But also I should be careful of not being fearful . I did the following adjustments 1) I covered more than half of my position. 2) Remaining position I rolled below 200 points. I also hedged the same by selling even lower strike PUT of near expiry. All this ensured, I have taken profits. And then I am also in the trade. Downside is I won't be making large money if NIFTY continues to sell off in the next 2-3 days. Why did I booked some profit? 1) NIFTY made a very symmetrical move to the initial move, and many times, that makes traders to cover the positions. This means less momentum on downside. 2) There was a large 0.6%+ hourly bar at important support level - 11040. This also can be seen as a hammer in the 2hr chart. 3) Tomorrow is expiry. And because we had a large range month, it is not unnatural to have some confusing counter moves. It is better to step aside and just watch. References: Sep 13 Short Sep 3 Short Aug 28 Short
NSE:NIFTY
by Observe_Think_Act_Think
IRON TARIHi guys, this is a new iron condor to set, 4 weeks with 10% strike So our short legs are @ 256 and @ 313 We have 80% probability of success, so a rew/risk 100-80/80= 20/80 = 0.25 Depending on the size you can trade, and the spread of the 2 verticals, we can reach a Rew/risk of about 0.37, that is 50% more than 0.25. The preminum is not that much, but we have a very high succesfull rate at our side, plus we can always roll on leg is the things go bad to lower our risk. Using a wider spread the odds increase more, because there is more room for the price to move before to reach the maximum loss, even if in this case we can always close the leg before expiration, to lower the loss. Enjoy your wallet! Tari.
NYSE:HD
by TARITRADE
JETS ETF bearish inclined naked calls - 16 Oct expiryOnce again I'm re-entering a JETS options trade given the low volatility. The industry still weak and I don't think we will see much upwards movement in the next month. 1 Sep when a majority of stock spiked upwards. JETS had minimal movement. As such I sold calls at the high of a key price resistance point. The current RSI is at a high band of 66. I did not cover this options trade as I realised my covered options did not protect when volatility increased and the strike got closer. I'm coming up with ways that I can better hedge against volatility but for now, I am relying on basic TA and historical low price movements Sold 80 Calls @ 0.25, Strike 22 BP block: 15k Max gain - est $1958.05
AMEX:JETS
by Ronin_trader
2
Marriott bullish inclined defensive options - 18 Sep ExpiryRolling on my previous MAR trade that expired on the 28 Aug. I decided to continue with MAR as price on the 25 Aug seemed to be having trouble rising. RSI was also at a high band of 65. Overall, price seemed to be pretty predictable and not volatile at this point. As my defensive trade is focused on picking off premium. I do not expect price to rise and as such, I structured a bullish inclined trade with a Max gain at strike 109.96 ($1677) and breakeven at 111.27. Hoping that my contracts can just expiry worthless. If price ranges or goes bearish I will collect est. $1079 Sold 14 Calls @ 0.93, Strike 110 Bought 1 Call @ 2.13 Strike 104 BP block: 13k
NASDAQ:MAR
by Ronin_trader
CHWY Defensive Bullish inclined - 18 Sep ExpiryCHWY is an online retailer of pet food. Since the start of the year is has generally been on a bullish uptrend. I picked CHWY as it's price movement seems pretty predictable and not very volatile. Price has recently hit a nice high 52 week high and now seems to be in a range and testing that key 52 week high price point. I feel that there is a higher probability of it moving downwards, especially with it's RSI leaning towards the higher band of 60. As my defensive trade is focused on picking off premium. As such I have made it bullish inclined with a Max gain at strike 70 and breakeven at 71.23. So the scenario I aim for is a bearish price that so that my contracts can just expiry worthless. I'm worried as Tradingview has pegged earnings at 21 Sep, but other sources has it at 8 Sep/15 Sep. I only realised this after the trade was entered and TOS showed a different earnings date. Defensive Profit $1333 Bought 18 Sep @ Strike 60 Calls +1, $2.7 Sold 18 Sep @ Strick 70 Calls -20, $0.81 BP block: 12k
NYSE:CHWYLong
by Ronin_trader
JETS ETF - Protected Bearish Inclination 18 Sep expiry There seems to be a resurgence of COVID-19 cases across the globe. Before Sep 18 I doubt there would be positive news for the travel industry, especially in the US. As price broke the support line, technically theres a chance it will continue dropping. Positive news on the stimulus won't help travel and I do not expect an influx of investors into the travel industry as it is one of the weakest sectors and money would probably flow first into something more solid like tech or at least the S&P 500. This is a protected trade. If price goes bearish, I have a chance to hit my max gain of est. $3222 but I must close the contract before it drops too much my way otherwise I will start losing. If prices don't go my way (goes bulls up) or ranges I will collect est. $1250 Would prefer this to be a 4 weeks contract, but 18 Sep (8 Weeks) had a better price for my trade structure Sold 80 Puts @ 0.26, Strike 12 Bought 10 Puts @ 0.73 Strike 14 BP block: 10k Max gain - est $3222 Planned Minimum gain - est $1250
AMEX:JETSShort
by Ronin_trader