The day that I have been talking about for the past 12 months is approaching rapidly: the stock market is tanking fast, which means opportunity.
As it was another pretty ugly day, I had to roll down quite a few of my positions but the beauty of options trading is that you can keep adjusting your portfolio and let time work in your favour.
So what's my trade for today?
Considering the massive falls across the board, there are heaps of attractively priced stocks at the moment. #AAL ( #AmericaAirlines ) is one of them. I have already traded this stock a fair bit and always managed to come out on top. The net tangible asset value to price ratio is in negative, which means you can get $1 worth of tangible stuff for less than $1. To me it's a deal.
I selected the June $14 put as it pays decent amount of premium and consumes very minimal capital. Also, I always ask myself the question: would I buy this stock at $14 if I was a buy and hold stock investor? I'd say: yes.
Trade Type: Short Strangle
Expiry: 17 Jun
IV Rank: 66.3
Cap Req: $187
Annualised Prof at Expiry: 320%
Let me know your thoughts.
Closed at $0.23 for an annualised profit of 1000%.