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| DISCLAIMER: This trade is based on this date. I'm not suggesting a move up or down. I'm showing my trade that I have already done. I'm not recommending this stock as a purchase/trade. Think of it like this, I'm 'Showing you the World thru my Eyes'. |
| NEW TRADE ALERT |
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| Monday, February 24, 2020 |
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| Cash Secured Put Trade opened using a Standard Cash Secured Put Strategy |
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3x ETF
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| NEW Cash Secured Put position with TQQQ (TQQQ) this week |
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| The trade idea and what is the expectation |
| The markets are selling off all the fluff ... now I'm gonna say this virus fear isn't legit but my thought it we get some news today, market falls, no news tomorrow, market rally, repeat very similar to the way the markets handled the China trade war news ... this might have been a little early on my part and the markets probably peel back more ... but this is a JUNE 19th CSP so I feel with TIME DECAY this CSP Prem will shrink, I will never go to expiration, I will close this trade out with a profit in Prem only ... we will see I guess :) |
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| The Headline Krum! | Yahoo Prem |
| TRADE KRUM! | DAYS | Cash on Cash % | Annualized |
N/A
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| $1,290.00 | 116 | 13.44% | 42.28% |
| Being this is a leverage ETF (3x ETF) Yahoo Prem does not have a rating on this equity |
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| Max Profit Projections for this trade |
| COMPANY | SYMBOL | SHARES | PRICE | TOTAL COST |
| TQQQ | TQQQ | 100 | $96.00 | $9,600.00 |
| EXPIRATION DATE | DAYS | STRIKE | OPTION | CoC % GAIN |
| Jun-19 | 116 | $96.00 | $12.90 | 13.44% |
| DIVIDEND | DIVIDEND GAIN | OPTION GAIN | STOCK GAIN | TOTAL KRUM |
| $0.00 | $0.00 | $1,290.00 | $0.00 | $1,290.00 |
| All calculations above are based on collecting [ Stock move + CCW + DIV if offered] |
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| Did this trade meet the Golden Rules? |
| SP500 type | Earnings? | Dividend | Volume? | Open Interest? |
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| No - 3x ETF | No - 3x ETF | No - 3x ETF | Yes they do | No < 100 |
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| The finer details of this trade |
| Trade details - 1 contract(s), Strike Price $96 , Premium of $12.9, with a >Jun 19th< expiration date receiving a total credit of $1290 per share |
| Used the cash of 100 shares which equaled $9600 to Sell a Cash Secured Put making $12.9 per share premium in profit or $1290 Cash Secure Put KRUM! |
| The will be a 116 day trade |
| This Out the Money (OTM) Cash Secured Put trade has a potential Cash On Cash Return of |
| Cash Secured Put - if not assigned the shares I make $12.9 per share, or 13.44 % |
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| Downside Protection summary (if this trade goes bad) |
| CURRENT STOCK PRICE | STRIKE PRICE | D/P PRICE | $ PROTECTION | % PROTECTION |
| $95.68 | $96.00 | $83.10 | $12.58 | 13.15% |
| What's my break even price? (Stock Price - Prem - Div = Downside break even Price) | $83.10 |
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| What's the expected move in the stock? |
| Current Stock Price | Implied Volatility | Imp Vol (+) | Imp Vol (-) | DELTA |
| $96.00 | 63.40% | $126.43 | $65.57 | -0.43 |
| Delta = the expected % chance the stock gets to the Strike | -43.00% |
| | $126.43 | | |
| $96.00 |  | With Implied Volatility being 0.317% to reach $126.432 in this 116 day period, with this Cash Secured PutStrike Im hoping the stock moves just 0.317% of that 0.634% Implied Volatility | |
| | $65.57 | | |
| What is Implied Volatility? - Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. It could also mean there is an event coming up soon that may cause a big rally or a huge sell-off. However, implied volatility is only one piece of the puzzle when putting together an options trading strategy. - source: Zacks Investment Research |
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| This Covered Call trade has 2 typical outcomes |
| CSP - Outcome #1 - the stock does not close at or below the strike price. If this Cash Secured Put option trades above the strike price the CSP buyer will not give me the shares then what they can sell them for on the open market. I keep the premium and am not assigned the shares. Trade expires worthless |
| CSP - Outcome #2 - the stock does close at or below the strike price causing me to be assigned the shares are my strike price. I am assigned the shares and I keep the entire CSP premium I was paid. |
| CSP - Outcome #3 - Possible early assignment - the stock has traded below the strike price and for whatever reason the CSP buyer executes the trade, causing early assignment. I will be assigned the shares and I keep the entire CSP premium. The trade ends. |
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| Further research with - Using charts for technical analysis, Div info and Earnings Report Date |
| RSI, SUPPORT LINES | KELTNAR, OBV | | DIVIDEND | EARNINGS REPORT |
| View Chart-TQQQ | View Chart-TQQQ | | Verify-TQQQ | Verify-TQQQ |
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| No | No |
| - N/A- N/A |
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| Always look at a companies chart ... it tells a story and that story could be UP or DOWN |
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| How I could 'Manage' this trade should the stock rise or fall prior to expiration |
| I could manage this Cash Secured Put - #1 - The stock moves HIGHER then my strike price and at or before expiration I can either let the option expire worthless as the stock will not be assigned to me considering it is now trading HIGHER then my strike. I can buy back the option cheaper and release the obligation, collecting the difference between what I received and what I paid to release the obligation. |
| I could manage this Cash Secured Put - #2 - The stock dips below my strike price and I'm assigned the shares OR I can buy back the option prior to expiration, most likely paying more for the option then I was paid, losing money but not being assigned the shares. |
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| Education Corner |
| Great Covered Call video posted at | |
| Cash Secured Put - Description -The cash-secured put involves writing an at-the-money or out-of-the-money put option and simultaneously setting aside enough cash to buy the stock. The goal is to be assigned and acquire the stock below today's market price. Whether or not the put is assigned, all outcomes are presumably acceptable. The premium income will help the net results in any event. The investor is bullish on the underlying stock and hopes for a temporary downturn in its price. If the stock drops below the strike, the put may be assigned. That would allow the put writer to buy the stock at the strike price. The effective purchase would be even lower: strike price less the premium received. There are two principal risks. First, the stock might not only dip but plummet well below the strike price. The investor must be comfortable with the strike price as an acceptable long-term acquisition price, no matter how low the market goes. Source - https://www.optionseducation.org/strategies/all-strategies/cash-secured-put |
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| Disclaimer - No - at the time of this posting I did not own the shares of this equity. and it probably means I've done a Cash Secured Put ... for which if this trade goes against me I *will* own these shares ... I risk my own money on this trade and am accountable for the trade results. |
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