I made a post a while ago about Stellantis and why I was investing the company. I still believe in the long term outlook, but my short term view of the stock was miscalculated and I bought too early.
However thanks to @Optionspuppy 's guidance, I've adopted a new strategy of selling options on stock I own, by either profiting off the sideways movement of the stock or locking in and capping my profit on a stock but also hedging against a downside.
My average price is 14.98 on stellantis, with a paper loss ranging around 200 to 300. Previously I sold a call at 15.0 and after a week rolled for a 9 dollar profit. But instead of getting a smaller premium by selling OTM options I decided to sell a dated ITM call option.
14.0 at 390 days for 1.25. By doing this I reduce my average cost to 13.73, and having to hold this contract for 390 days. So I still have a paper loss now, but if the stock gets called away, the premium will put me in profit for about $27.
But see holding a 390 day contract for only 27 dollars can seem very unrewarding. That's why I see this option of less of a profit making situation but a hedging one.
There is a scenario for profit to be made, where if the stock drops further, the contract price will fall and then I plan to roll this trade.
Personally the trend to me seems like a double top, and stellantis has been struggling to break resistance for quite some time. Will keep you guys updated
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- MillionaireTiger·01-24Thanks for the recap and analysis! Shoutout to @Optionspuppy [Applaud][Applaud][Applaud]LikeReport