How Our Traders Closed 4 Put Positions Last Week Banking $824
February 5th, 2021
It was a good week for stocks. In fact, it was the best week for the market since November, with the S&P 500 closing up 4.7% at a new record high.
It was also a good week for us at Options Income Blueprint. We closed four profitable put positions. Traders who sold just one contract of each could have earned $206 in income.
This marked our sixth successful trade on General Motors in the past three months. Over the course of those trades, members netted $316.
The company’s increased focus on electric vehicles has gotten investors’ attention. By 2025, GM said it plans to launch 30 new electric vehicles, spending $27 billion on EVs and autonomous-driving technology
Given how hot stocks related to the electric vehicle market are right now, I think we can expect to see heightened volatility in GM shares for some time. And I plan to continue recommending trades to capitalize on that.
Twitter was another repeat winner. In fact, we’ve closed two profitable put trades on the stock in the past week and a half, banking $71 in cash.
I expect there to be more opportunities to trade Twitter in the near future. But I’ll be waiting until after the company reports earnings next week. With a stock like TWTR, the risk of holding a position through an earnings announcement is simply too high.
As for Pfizer and QuantumScape, these stocks are new additions to the Options Income Blueprint lineup.
On Tuesday, the day we initiated the positions, Pfizer was trading lower following the release of the company’s fourth-quarter earnings report.
While revenue rose 12% year over year to $11.68 billion, beating analyst expectations, earnings fell short of estimates. More importantly, though, the company said it expects sales of its COVID-19 vaccine to total $15 billion in 2021.
As I expected, the dip in shares was temporary. We were able to close the position early as they bounced back, earning 0.9% in three days, or 106% on an annualized basis.
Finally, we have QuantumScape.
As I said, electric vehicle-related stocks have been on fire, and QuantumScape produces solid state lithium-ion batteries for electric cars.
QS is far more speculative than the typical Options Income Blueprint stock. It went public less than six months ago and the company has yet to turn a profit.
But I’ve been watching how it trades in recent weeks to see if it would present a good opportunity.
The stock is exceptionally volatile, but the real risk is in owning shares long term. In the short term, the high volatility levels translate into excellent premiums for option sellers.
Case in point: On Tuesday, with the stock trading at $41.63, we were able to sell the QS Feb Week One (2/5) 37 Put for $0.40, or $40 per contract. That put was more than 11% out of the money, giving us a large cushion should the shares move against us.
Since we only had to put up $3,700 in cash to secure the put, our potential rate of return was 1.1% in four days, or 99% annualized, if the option expired worthless.
By Thursday morning, the put premium was down to a nickel. So, I recommended members close out the position.
We pocketed $35 in cash for a trade open just three days and boosted our annualized rate of return on the trade to 115%.
You can bet I’ll be on the lookout for more chances to trade this volatile stock, along with this week’s other winners.