Tuesday, January 12, 2021

UCPTD - WDJT - KR - GEM MINT 10 TRADE - Cash Secured Put (3 day - $93.99) Trade


All rights reserved - Core Position Trading, LLC - 2021
WHAT DOES JOHN THINK?
"What does John think of this Cash Secured Put idea?"
TIME AND DATE STAMP | .January 12, 2021
The Kroger Co. 

DISCLAIMER: This is 100% for entertainment purposes - I am not recommending you to take action on anything I mention in this reply. This is based on the dates and stock information you provided. Think of it like this, I'm 'Showing you the World thru my Eyes'.
Your brief explanation why you like this trade idea
Kroger did not experience the nose dive back in March like so many others. Decent premium, nice stock to own.
My thoughts of your essential trade idea and What is the chart telling us for this option trade?
Very tight expire date being in just 3 or 4 days ... premium for this 3 day trade is amazing ... need to further dig into this one but it's a good start
KR recently has moved past RESISTANCE and has peeled back ABOVE that RESISTANCE and now can make a case for the being the NEW SUPPORT ... see the chart above ... A CSP here @ $32 with the stock trading at $31.9x ... you might not be assigned the shares ... if you are, it sounds like you'll take them
The Headline Krum! (EXPECTATION)
All of my calculations below are based on 100 shares ... regardless of actual shares ... the Cash on Cash % gain will be the same
TYPE TRADEDAYSCash on Cash %Annualized
CSP31.47%N/A
Max Profit Projections for this trade (EXPECTATION)
COMPANYSYMBOLSHARESPRICETOTAL COST
The Kroger Co.KR200$31.76$6,400.00
EXPIRATION DATEDAYSSTRIKEOPTIONCoC % GAIN
1/15/20213$32.00$0.47$0.71
DIVIDENDDIVIDEND GAINOPTION GAINSTOCK GAINTOTAL KRUM
$0.00$0.00$94.00$0.00$94.00
All calculations above are based on your WebForm submit and Yahoo's Summary page
My thoughts after running the numbers
Making 1.47% on this In The Money(ITM) Cash Secured Put if you did the Annual CoC% gain ... incredible ... this window is so tight ... and you know you might get the shares and are ok with it ... Good enough for me!
Downside Protection
CURRENT SHARE $PREMIUMSTRIKEPRICEWOULD FALL
$31.76$0.47$32.00$31.29-$0.47
BREAKEVEN-1.48%
My thoughts on the Downside Protection
Chart shows me this now has good support in a sideways to higher market ... nothing I can add here > I like it
DANGER ZONE? Earnings Dates and Ex-Dates
The 2 company events that add volatility to a stock trade: Earnings Reports and a companies Ex-Dividend date ... always verify
EX-DATEEARNINGS REPORT
Nov 12, 2020Mar 03, 2021 - Mar 08, 2021
Verify-KRVerify-KR
My thoughts on coming company events
If you're assigned the shares it looks like the dividend will come in Feb ... but its not posted ... just checked last years 1Q Ex-Date ... so if you got the shares you get a little bonus and probably collect a div too if you elected to hold the shares ... no ER to worry about
Research Resources for this stock that I check to verify
CHARTYAHOO SUMMARYEARNINGS?KELTNERDIVIDEND
See Support-KRYahoo Summary-KRVerify-KRBBands/KC-KRVerify-KR
How YOU could 'Manage' this trade
I could manage this Cash Secured Put - #1 - The stock moves HIGHER then my strike price and at or before expiration I can either let the option expire worthless as the stock will not be assigned to me considering it is now trading HIGHER then my strike. I can buy back the option cheaper and release the obligation, collecting the difference between what I received and what I paid to release the obligation.
I could manage this Cash Secured Put - #2 - The stock dips below my strike price and I'm assigned the shares OR I can buy back the option prior to expiration, most likely paying more for the option then I was paid, losing money but not being assigned the shares.
My OVERALL thoughts on this trade?
CPT GEM MINT 10 OF 10 Trade
I grade this one a CPT GEM MINT 10 OF 10 Trade because ... KEY ITEM > tight 3 day window, no ER, Ex-Date, events to sweat (THIS is KEY for the GEM MINT 10 Grade) ... the stock has broken thru resistance ... going higher and peeled back and tested the support and is moving off that new line of support ... you are willing to hold the shares knowing that you COULD BE ASSIGNED! ... now knowing that is good and didn't give cause for the GEM MINT 10 rating ... but it helps knowing you like the company and are willing to hold it ... and with the Ex-Date coming in Feb ... you could be assigned the shares and look to do a CCW+Div Capture ... YOU HAVE OPTIONS! ... and I agree, KR is a great name to own and YES - I would do this trade.



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UCPTD - WDJT - KR - GEM MINT 10 TRADE - Cash Secured Put (3 day - $93.99) Trade

All rights reserved - Core Position Trading, LLC - 2021 WHAT DOES JOHN THINK? "What does John think of this Cash Secured Put idea?"...