People Who Don't Trade Options Are Missing Out

2020년 10월 22일

Just a quick trade idea that I put on recently. I sold $5 strike November '20 CRON puts for a credit of 0.86 on Tuesday afternoon. This trade yields about 21% within one month, unlevered, and the stock has to drop almost 40% before you start to lose any money. With this trade you are committing to buy CRON at a price of $5, should your option be assigned. This seems like a fine deal to me, as $5 has served as a strong price base over the last several months and I expect it will continue to do so as various weed names continue to see more and more interest broadly. With the leverage I have at my firm, I'm able to achieve a 100% cash on cash return in this stock in one month, using my allocated buying power / capital contribution.

CRON , while generally volatile, doesn't deserve this type of volatility pricing, and shouldn't yield this much return for accepting long risk in it. That said, if I do get assigned, I simply plan on selling OTM calls to further lower my cost basis and generate cash flow. This is what's commonly referred to as a 'wheel' strategy. Why do people make trading so hard? Start learning about options and how you can crush the markets and have huge margins of error on trades while still profiting (I don't sell anything, just passionate about options lol).

Trades like this happen every day and all over the place, if you know where to look.