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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 |  | |||
| Tuesday, February 11, 2020 | ||||
| Cash Secured Put Trade opened using a Standard Cash Secured Put Strategy | ||||
 | ||||
| NEW Cash Secured Put position with ROKU Inc. (ROKU) this week | ||||
| If my shares are taken at expiration, this is the CCW KRUM! | Yahoo Prem | |||
| TRADE KRUM! | DAYS | Cash on Cash % | Annualized |  |
| $625.00 | 45 | 5.21% | 42.25% | |
| Yahoo Prem thinks the stock is OverValued'so I like to write that 'deep' OTM strike to provide decent downside protection and like to push the expire date out to give the stock a chance to recover should it seriously fall after a ER date or major news events. | ||||
| DOWNSIDE PROTECTION SUMMARY (if this trade goes bad) | ||||
| CURRENT STOCK PRICE | STRIKE PRICE | D/P PRICE | $ PROTECTION | % PROTECTION |
| $141.56 | $120.00 | $113.75 | $27.81 | 19.65% |
| Brief Description of WHY I did this trade and my expectations for it | ||||
| With this much downside protection and the stock rallying again to above $141 ... I playing the fact that I DO NOT think a bad earnings report will crush the stock some $27+ pts ... and if it did then by giving it 45+ days to recover ... I might catch a break and not be assigned the shares. VERY IMPORTANT part to this trade ... I WANT to own a 100 shares of ROKU ... I had better want that because I might get assigned these shares. ALSO note that with my Cash Secured Puts I like getting CASH ON CASH returns of at least 5% ... and this trade achieves that. | ||||
| MAX PROFIT PROJECTION - See below the profit on the other possible outcomes | ||||
| COMPANY | SYMBOL | SHARES | PRICE | TOTAL COST |
| ROKU Inc. | ROKU | 100 | $120.00 | $12,000.00 |
| EXPIRATION DATE | DAYS | STRIKE | OPTION | CoC % GAIN |
| Mar-27 | 45 | $120.00 | $6.25 | 5.21% |
| DIVIDEND | DIVIDEND GAIN | OPTION GAIN | STOCK GAIN | TOTAL KRUM |
| $0.00 | $0.00 | $625.00 | $0.00 | $625.00 |
| All calculations above are based on collecting [ Stock move + CCW + DIV if offered] | ||||
| No, they do not offer investors a dividend. | ||||
| Current Stock Price | Implied Volatility | Imp Vol (+) | Imp Vol (-) | DELTA |
| $120.00 | 81.00% | $168.60 | $71.40 | -0.22 |
| $168.60 | ||||
| $120.00 |  | With Implied Volatility being 0.405% to reach $168.6 in this 45 day period, with this Cash Secured PutStrike Im hoping the stock moves just 0.405% of that 0.81% Implied Volatility | ||
| $71.40 | ||||
| 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 | ||||
| Important Trade Details | ||||
| Trade details - 1 contract(s), Strike Price $120 , Premium of $6.25, with a 43917 expiration date receiving a total credit of $625 per share | ||||
| Used the cash of 100 shares which equaled $12000 to Sell a Cash Secured Put making $6.25 per share premium in profit or $625 Cash Secure Put KRUM! | ||||
| The will be a 45 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 $6.25 per share, or 5.21 % | ||||
| No Dividend capture with a Cash Secured Put because I do not own the shares | ||||
| Earnings Report during this 45 day period? Yes Earnings Report is (~) date of Feb-13th | ||||
| Did this trade meet the Golden Rules? | ||||
| SP500 type | Earnings? | Dividend | Volume? | Open Interest? |
 |  | | |  |
| Big enough for me | Yes Earnings | No they do not | Yes they do | No < 100 |
| This trade is all about the downside protection for the $120 strike ... I feel chances are this will not fall some -$27 pts even with an ER Wall Street doesn't like. We will see I guess. | ||||
| 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. | ||||
| Further research with - Using charts for technical analysis, Dividend information and Earnings Report Date | ||||
| RSI, SUPPORT LINES | KELTNAR, OBV | DIVIDEND | EARNINGS REPORT | |
| View Chart-ROKU | View Chart-ROKU | Verify-ROKU | Verify-ROKU | |
 |  | No | Yes | |
| $0.00 | Feb-13th | |||
| Always look at a companies chart ... it tells a story and that story could be UP or DOWN | ||||
 | ||||
| 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. | ||||
| 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 | ||||
| Disclaimer - Yes - at the time of this posting I do have a position in this equity. By posting this I am by no means recommending this equity and am not front running for its performance. I have risked my own money and am accountable for the trade results. | ||||
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