Over $800 In Juicy Option Premiums We Pocketed This Week
September 25th, 2020
At Options Income Blueprint, we booked two more winning trades this week.
The first was on a new name for us — Marvell Technology Group (MRVL).
Marvell is a semiconductor company that makes components for the 5G, cloud, artificial intelligence, Internet of Things and automotive spaces. These are all high-growth areas.
The stock is up 43% year to date and has held up well during the recent tech sell-off.
In Tuesday’s Live Trading Session, with shares trading at $37.81, I recommended members sell an in-the-money MRVL Sep Week Four (9/25) 37.50 Put for $0.48, or $48 per contract.
By Thursday, the premium on the put we sold had dropped to just $0.16, so I recommended an early closeout.
We booked a profit of $32 per contract, earning 0.9% in three days, or 104% on an annualized basis.
Our other winning trade was on a familiar name: Peloton Interactive (PTON).
In fact, this was the fifth time this year we’ve successfully traded the stock. Those who sold just one contract of each position could have made $278 in cash.
On Tuesday, we sold a PTON Sep Week Four (9/25) 82.50 Put for $0.47 following a dip in the stock on news that Amazon (AMZN) would be offering a so-called Prime Bike from Echelon Fitness for $500 that would compete with Peloton’s $1,900 bike.
By Wednesday morning, shares were up almost 9% since we put on the position after Amazon came out and said it did not collaborate with Echelon on any such product and had removed it from the site.
The rally gave us the opportunity to ladder up our put option for more income. So, we bought back our position and sold a PTON Sep Week Four (9/25) 90 Put, generating another $0.47 in income. This doubled our cash in hand to $0.72, or $72 per contract.
But the stock ended up reversing lower that day, and by Thursday’s close, PTON was below our new strike price.
So, when shares shot up Friday morning, I sent an alert to members telling them to book a profit on the volatile stock rather than risk holding through expiration.
We spent $0.12 to close, booking a profit of $0.60, or $60 per contract, for a 0.7% rate of return in four days, or 61% annualized.
It certainly was a wild four-day ride, but that’s the beauty of stocks like PTON. The elevated volatility means juicy option premiums that we can pocket.
I have a feeling members will be seeing more trades on MRVL and PTON soon.