as described in the picture
Comment:
I don ´t think the buyer of these options would yet excercised he´s right to sell. If he did, we don ´t mind. We are buying blue chip on the dip.
Trade active:
Now that the market moved up you can sacrife some of the money you received as a premium to limit potentional losses. Normally I would buy puts at 500 to limit the losses to 100USD/stock. Put option at 500 cost now 6USD.
If you do that:
Our total profit shrinks from 30USD to 24USD per stock.
Your total potentional loss is: 100 - 26 = 74 USD per stock.
This creates a negative RRR 1 : 2,86
Negative RRR is bad but it also represents the low risk we´re in.
Since I believe in Tesla and the growth in the very next future I am leaving this as a naked put and I am not taking any stop-loss precautions.
If you do that:
Our total profit shrinks from 30USD to 24USD per stock.
Your total potentional loss is: 100 - 26 = 74 USD per stock.
This creates a negative RRR 1 : 2,86
Negative RRR is bad but it also represents the low risk we´re in.
Since I believe in Tesla and the growth in the very next future I am leaving this as a naked put and I am not taking any stop-loss precautions.
Trade closed: target reached:
Options expired worthless. Profit earned: 510 USD.