Another tough day for the growth stocks. Primary reason: due to the inflation the value of future earnings is diminishing. But to see so many large companies lose over 50% of their value so quickly is quite fascinating.
It's easy to get tempted to sell put options against some of these big drops buy purely looking at the price movements but it can be very risky. Paypal is a perfect example. They became very popular as they came up with a new, secure way to process online purchases. Today, there are many companies offering similar or even better solutions so Paypal's value had to diminish at some stage.
Just like pretty much all growth stocks, ARKK has also lost a significant portion of its value. After 52% of drop since the end of November I thought it's time to try my luck with it. The IVR is still very high therefore the premium that the options pay is exceptional. However, I must admit that this is a risky trade with both legs are just outside of the 1SD (standard deviation), which makes the PoP (probability of profit) 70%. For those who want to try this trade with less risk, I suggest going wider with the strangle.