Another tumultuous trading day is behind us with the VIX closing above 30 again but considering that at some point it went above 33.5 the 30.15 at close is not that bad.
#X (US Steel) continued going up and I was actually wondering if the war in Ukraine has anything to do with it. If we look at this terrible situation from the macroeconomy point of view then we could rightfully assume that the demand for products that will be required to rebuild roads, bridges, buildings, etc. will go up. So if someone wants to just park their money somewhere for a few years then companies that are very active in these sectors in Ukraine could be great prospects.
For me, as an option trader, I rarely look at stocks with such long-term focus as my goal is to get in and out of a position as quickly as I can. In real-life it doesn't always work out like that as we can get 'stuck' in any position if the underlying paper (the stock) moves against us.
For example, if a stock trades at $100 and you sell a $95 put but the stock falls to $90 then you either close your position at a loss or roll to another position (e.g. roll to next month).
So what would I trade today?
There are so many to choose from due to the high IVR's across the board but I am committed to continue choosing one stock a day. So I would go for #AAL ( #AmericanAirlines ) again.
Once again it's near $17, which I consider very attractive and given that the capital requirement is very low, the returns can be huge.
The stats
Trade Type: Short Put
Strike: $16
Expiry: 14 Apr
Delta: 41
IV Rank: 49.7
Premium: $0.89
Cap Req: $222
Annualised Prof: 325%
I chose to go with high delta this time because I am happy to take more risk with AAL.