Unofficial New Trade
Unofficial New Trade Hello Smart Option Sellers! Happy Friday! How about a new trade (unofficial)? As we wait for new put-sell trades to show themselves, here's an unofficial one to consider. I like to offer these unofficial trades from time to time as an added bonus to my wonderful members. Typically these trades will fall outside the parameters of what I look for in an ideal put-sell, but still worthy of a good look. In this case, the only thing holding me back from making it official is the stock's price. Caterpillar (CAT) One of the bluest of the blue chips - CAT. Currently, CAT is trading at $141 per share and sitting on a strong weekly support area (as well as $140 being a solid daily support area). Take a look at the chart below.
In the Smart Option Seller, we like to concentrate on stocks that are roughly $50 per share or cheaper. The only thing holding me back is the price of CAT. Otherwise, it would be an official play. You'll be targeting CAT at a level between $75 -$80 per share, which you can see as an area that hasn't been hit since November 2016. Have you been wanting to get your hands on CAT near those levels? If so, and if you feel you'd like to get in on an unofficial put-sell trade, here's what you can choose to do: Sell (sell-to-open) the CAT January 18, 2019 $75, $77.50 or $80 put options as an opening transaction (sell-to-open). You choose the strike price that interests you most and sell it within the corresponding bid/ask markets. At the moment, the $75 put is worth near $.30 per contract, the $77.50 puts are worth $.35 per contract, and the $80 puts are worth roughly $.40 per contract. If you place a trade, put your offer price in the middle of the bid/ask spread. That's the best way to get a fair fill. With CAT stock near $141 per share, you're looking at well over a 40% cushion above any of these strike prices. That's an incredibly large drop that CAT would have to undertake in the next seven months. If you have any interest in potentially purchasing CAT stock at $75, $77.50 or $80 per share, might as well let someone pay you to do it. With an $80 strike price, it would cost $8,000 to buy 100 shares if you are called upon to fulfill the obligation. If you have a margin account, you would need to hold aside $1,600 in margin requirements (20% of the purchase price is typical for most brokers) to execute this trade per each single put option sold. If you sell ten of the put options, you'd need $16,000 in margin hold and that puts you in line to potentially buy $80,000 worth of CAT stock. So plan accordingly! Remember, this is an unofficial trade, so I will not be following it. That's all for now. Continue to hold all other positions as-is. Contact me here Regards,
Lee Let's Grab That Cash!