Initial Trade on February 25th
Short 1x Feb 26th 2021 $80 Put – ($5.00)
Initial Thoughts on Trade
Here we go again with the WSB crowd and Gamestop. Yesterday the stock opened at $44.70 and got all the way up to $91.71. If that wasn’t crazy enough, the stock opened today at $169.56. As a result of this insanity, options premium skyrocketed. With the stock trading around $120 ish at the time, I saw a good opportunity to short some very expensive puts. I feel this is a very good trade because I’m getting about 4.2% of the current stock price for 1.5 days, and the only way the stock gets put to me is if it falls about 33%. In the unlikely event I do get assigned the shares, I believe options premium will be more the high enough for me to get out from under this trade for a profit via a covered call
Trade Update on February 26th
The short 1x Feb 26th 2021 $80 Put expired for a $5.00 profit
New Short 1x Mar 5th 2021 $70 Put – ($10.00)
With the $80 puts about to expire worthless, I saw that options premium on GME was still insane. So with that, I chose the $70 puts for $10 which would get my effective assignment price to $55 (if you include the $5 that’s about to expire). Another amazing risk/reward spot here and we will revisit this next week.
Trade Update on March 2nd
GME hasn’t been as volatile this week, and as a result, our put values have plummeted. With almost no value left, I closed out the trade today for a nice profit. This is a stock I will continue to look for high premium selling opportunities in going forward.
Close Short 1x Mar 5th 2021 $70 Put – $1.50
Total Profit: $5.00 + ($10.00-$1.50) = $13.50