I am very much looking forward to next week with all those big names announcing their Q4 results.
Options traders can expect some great deals coming our ways so I prepared my portfolio and closed a few of my positions that I did not feel made sense to keep holding onto.
My closed positions today are:
The numbers speak for themselves.
What's really awesome about these deals is that they were quick wins with the longest one only 9 calendar days old.
How can you replicate this?
When you find a stock with relatively high IVR then it may make sense to go for it because once the volatility collapses then you win.
The great news is that there are always companies that meet this criteria, which is why trading options is a fantastic vehicle.
By trading based on volatility you do not need to be directionally bias, therefore strangles (selling put and call at the same time) can work nicely.
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?
#KMX (#CarMax) Feb $55 put. The next earnings is still far away in April and the $55 strike is substantially below the current price level. In fact, it was only breached once since the pandemic. The IVR is relatively low but that's fine as this is purely a directional play.
Trade Type: Short Put
Expiry: 17 Feb
IV Rank: 82
Cap Req: $558
Annualised Prof at Expiration: 214%
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.