Today's downwards market with #VIX around 30 represented very many opportunities so I just picked one that appears pretty safe: #FXI, which is an ETF representing the Chinese large-cap stocks.
Looking at the 20 year chart, which includes some really tough periods like the #GFC (#globalfinancialcrises), we don't need much experience to see that today's price at $36.71 is on the lower end of it's range. I drew a line at just over $36 for easy read of the chart.
So what's the opportunity here for an option trader?
Here is a snippet of the option chain for March 18 expiration (28 days):
The orange shaded area shows the 1 SD (standard deviation) and normally I would go outside of the 1 SD but I am comfortable taking more risk with this particular ETF and go with the $36 put strike (left side of the strikes), which trades between $0.81 and $0.88.
Capital required (bp): $667
Expiry: 18 March
Annualised profit potential: 164%
There is also a rationale to sell the $35 put instead as for $0.30 credit less you reduce your risk by $1 but it would still require $565 capital. However, it's certainly a safer deal than the $36 put.
Also worth noting that sometimes it's a good idea to sell the call side too (e.g. $39 strike) but I personally prefer to play one side as you can close deals faster.