With the volatility (VIX) at elevated levels and many of the stocks well off the levels they were at last week there are plenty of great deals out there.
I was able to close some of my short call positions due to the falling prices and exchange them for some short put positions in other stocks.
Short call >> you sell a call option hoping that the price will fall, which reduces the value of the option you sold thus you make money.
Short put >> It's the opposite of the short call. You profit when the stock goes up.
In some instances I converted my short call positions to strangles after the price fell instead of closing the trade for a minimal profit. By doing this, we can end up with a wide strangle and decent profit potential.
So what's my trade for today?
#FDX (#FedEx). It's down well over 21% on a pre-earnings announcement. Earnings is next week but because they released the results already I don't see much risk in here. The stock dropped from $206 to $155. That's an insane move. I sold the $125 put, which is an absolute no-brainer in my opinion. It will be interesting to see how the price will change after the earnings and whether the volatility, which is currently at significant levels, will drop.
FDX Monthly Chart
Trade Type: Short Put
Expiry: 21 Oct
IV Rank: 70.6
Cap Req: $1255
Annualised Prof at Expiry: 72%
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.