Papa Bear
04-27

Thanks Tiger for organising a physical meetup yesterday for trade to win participants. It's a pleasant little event to get to see everyone's faces along with the interactions.


Whilst listening to the experiences and questions shared and answered throughout the event, I am beginning to feel a little nugget of concern about the application and concept behind the simple use of cashed secured put to generate income in the current environment.


Take $Palantir Technologies Inc.(PLTR)$   as an example. It was shared that collecting 2-3% premium weekly using cash secured puts is viable with this ticker. Disclaimer for this strategy being risky for assignment.


Perhaps let us dive deeper into my thoughts on this example using cash secured put strategy.

In order to collect a premium of around 3% per week, the option seller will probably be required to open a position near ATM, around delta 0.4. That means a more than 40% chance of assignment. 


Bear in mind the philosophy of selling cash secured puts only on fundamentally good companies you want to own in the first place. 20 analyst consensus on $Palantir Technologies Inc.(PLTR)$   from Tiger app price it at an average of around $90. Which is about 20% to the downside from the current close. If the option seller were to be prudent with strike price selection and sincere in getting assignment, that's only 0.2% premium weekly selling cash secured puts at strike 90.

Granted there are many ways to adjust cash secured puts to avoid assignment, but it's not without cost to margin and time.

The question that begs to be answered is if selling simple cash secured puts with high delta weekly still a viable strategy for popular retail ticker like $Palantir Technologies Inc.(PLTR)$  or should you perhaps explore other option strategies in the coming week?


 

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Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

  • Tiger_comments
    04-28
    Tiger_comments
    Thanks for coming[Heart][Heart] and sharing your insights on Palantir! Welcome to participate more events on Tiger Trade[Applaud]
  • Enid Bertha
    04-30
    Enid Bertha
    I'm holding the 5/9 CALL.. Come on PLTR, you can do it!
  • Venus Reade
    04-30
    Venus Reade
    Don’t even think about shorting above 108
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