Hi Advanced Traders!
Of course, this is an environment to be an options seller since IV is high. Many of you who have been setting up bear call spreads over the past several weeks have been making a couple hundred to thousand dollars with your multiple contracts.
If you have contracts open for AMD, they most likely dropped in value due to the underlying dropping and from theta rapidly decreasing the value of your option legs with the last couple of days until expiration. If this is the case, you can close some or all of your positions to lock in your gains and consider opening up some new contracts as we ride through this volatile market.
AMD Bear Call Spreads
Expiration Date: February 18, 2022
Step 1: Buy 1 $165 strike call option with a delta 0.05 for $60
Step 2: Sell 1 $145 strike call option with a delta 0.16 for $165
Step 3: Set a buy stop order of 100 shares at $144
Credit received: $165 - $60 = $105
The goal is for AMD to stay under $144 from now until February 18. If AMD rallies up towards $145, we will buy 100 shares at $144 each, sell our purchased call option, and convert our trade into a covered call.
As always, feel free to tweak the width of your spreads to your risk tolerance. If you don't feel comfortable with setting up spreads during earnings season, you can wait afterwards.
Have a wonderful weekend! 😀
Steve and the Call to Leap Team
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