USB Bullish inclined Naked Puts 28 Jan Expiry (Jan Track 3)
Whats The Plan/Trade/Thought
- US Bancorp is an American bank holding company. With the Fed intending to increasing interest rates to combat the high inflation numbers. I expect banks to see an increase in their earnings from this especially near term where consumer sentiment is still bullish.
- Already the Nasdaq bank index is up around 32% for the year
I Feel
- The market in my opinion is in a bearish range. With drops being deeper than the recoveries. USB and a number of the financial counters like MET, TFC, BK, BAC are in a similar price pattern. Mostly near the bottom of their range.
- If the range continues it will also be aligned to my near term POV on the banking sector
Imagine Yourself Taking The Other Side
- On the flip side as I do feel we are market wide in a bearish sideways movement. Having USB drop and break the range is also a possibility. Will need to monitor this. Also the price action since 25 Oct 2021 has been bearish.
Imagine Yourself As A Neutral Observer
- This trade is really not about up or down but really about trading on the lack of expected volatility. Do we expect defining movements in Jan?
Look For New Information
- There is an Earnings release on the 19 Jan that I only realised after I entered the trade. This is very careless of me... I will need to be vigilant during that period. But generally earnings in the past three quarters have beaten estimates
How Do I Feel Now
- Somewhat lukewarm with my decision. I believe the uncertainty is due to the 19 Jan Earnings I did not notice. Also while the daily chart is showing a range and I am reacting to it and not predicting a bottom. I am still apprehensive as it can break the range.
Trade Specs
- Sold 160 Puts @ 0.25 - Strike 51
- % to Strike 10.14%
- ATR % is 94%
- BP used 81K
- Max Gain: est $3896