25-08-2021, 09:04 PM
Hello L&G
I would like to share a trade that I took this week. The setups are as per listed in the kindle book (Turning The Wheel) but I choose a speculative stock instead of a fundamentally strong company. This is a stock that I don’t mind owing for speculative purposes.
The stock is SKLZ, a technology company that provides monetization services to game developers, which is listed in the NYSE.
The company recently released its earnings, which is worse than expected, and the share price dropped from $14+ and seem to find support around $10. The stock is trading at $11.10 when I entered the trade and is moving upward toward $12, which may act as a strong support if the price move above it.
With the setups and intentions defined, I have sold a cash secured put (1 contract) on SKLZ at strike $10 (9% discount to current price), expire on 1st Oct’21 (market closed) and collected a premium of $68.
By expiration date (1 Oct’21),
- If share price stays above $10, I will not be assigned the shares but will keep the $68.
- If share price drops below $10, I will get to buy 100 shares at $10 and at the same time, keep the premium of $68. Which effectively reduce my purchase cost to $9.32 per share, which is a 16% discount to current stock price. (1 options contract is 100 shares)
As this trade is intended to be a cash secured put, I have set aside $1,000/-in the trading a/c, in case I get assigned the shares.
Wish everyone making money on whatever you are trading!
PS. The above post is not to promote speculating in options trading but just to show that there are other possibilities other than the traditional straight buy, hold and sell to trade a stock.
I would like to share a trade that I took this week. The setups are as per listed in the kindle book (Turning The Wheel) but I choose a speculative stock instead of a fundamentally strong company. This is a stock that I don’t mind owing for speculative purposes.
The stock is SKLZ, a technology company that provides monetization services to game developers, which is listed in the NYSE.
The company recently released its earnings, which is worse than expected, and the share price dropped from $14+ and seem to find support around $10. The stock is trading at $11.10 when I entered the trade and is moving upward toward $12, which may act as a strong support if the price move above it.
With the setups and intentions defined, I have sold a cash secured put (1 contract) on SKLZ at strike $10 (9% discount to current price), expire on 1st Oct’21 (market closed) and collected a premium of $68.
By expiration date (1 Oct’21),
- If share price stays above $10, I will not be assigned the shares but will keep the $68.
- If share price drops below $10, I will get to buy 100 shares at $10 and at the same time, keep the premium of $68. Which effectively reduce my purchase cost to $9.32 per share, which is a 16% discount to current stock price. (1 options contract is 100 shares)
As this trade is intended to be a cash secured put, I have set aside $1,000/-in the trading a/c, in case I get assigned the shares.
Wish everyone making money on whatever you are trading!
PS. The above post is not to promote speculating in options trading but just to show that there are other possibilities other than the traditional straight buy, hold and sell to trade a stock.