Option Strategies: MSTR& SMCI
Hello everyone! Today i want share some option strategies with you!
1.
$SUPER MICRO COMPUTER INC(SMCI)$ is trading under $35 and yet this put-write position is in profit. "How can that be" you ask?
The answer is ... VOLATILITY !!
What do we mean by that, and how does that explain this 35-strike put being in profit when $SMCI is trading below 35?
We sold this put on Dec. 16 when SMCI was trading at a price in the 31.50-33.50 range. As of today, SMCI is trading at 30.82. So, you would think that we should be at a loss on this trade since the underlying's price has dropped lower than the strike as well as lower than the price range where we wrote this put.
Look at the volatility chart. Volatility was very elevated on Dec. 16th. Higher volatility = higher premiums. The volatility has dropped down since then to where that much of a volatility drop positions this trade in profit even with the underlying's current price lower than where it was when we sold this put.
Understanding and knowing how to take advantage of elevated volatility is important for optionselling traders.
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2.
Copied the homie on this $MicroStrategy(MSTR)$ trade. Jan 24 expiry.
Buy - write - write for net credit, but can still profit from a move up on MSTR as long as it does not breach 700.
- BTO 450C
- STO 452.5C
- STO 700C
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