It was great to have a bit of pressure off the market today.
As the new year approaches many analysts are eager to broadcast their predictions, which are only good for entertainment.
A few weeks ago I had a meeting with a representative of one of the largest banks in Australia and they said that I should sign up to their top analyst's newsletter. I voiced my doubts over such predictions and they quickly admitted that their top analyst is considered the best as he gets his predictions right 50% of the time...
For those, who are new to my daily market comments, I place and document one trade a day with the objective of helping everyone learn how to trade options.
What's my trade for today?
#CALM (#CalMaineFoods). They had earnings and missed expectations. Companies often get punished for that but as soon as the emotions calm down the share prices tend to stabilise. The price dropped 17.5% from $64.44 a day ago to $53.17 and I sold the $47.50 put option, which is another 10% below the current level.
Trade Type: Short Put
Expiry: 17 Feb
IV Rank: 28.2
Cap Req: $485
Annualised Prof at Expiration: 164%
IMPORTANT: Studying previous trades provide the opportunity to everyone to learn a great deal so I encourage you to click on the links below and digest the info.
Watch this short clip for more detail:
Let me know what you think.
Closed at $0.81 for an annualised profit of 421%.