NaughtyPines

PREMIUM SELLING: TWLO OCT 21ST 45 SHORT PUT

NYSE:TWLO   TWILIO INC
3 months ago
I generally don't like to ride broncos right out of the stall, but I might make an exception here ... .

This is because the Oct             21st 45 short put is currently bid 3.00, ask 3.80 (mid 3.40). That's $340 in premium for a one contract 58 and change underlying ... .

Alternatives:

Sept 16th 45 short put: bid .95, ask 1.11, mid 1.03.
Oct             21st 40 short put: bid 1.65, ask 2.10, mid 1.87.

I wouldn't be looking to acquire here, but rather to just squeeze some premium out and would look to take it off at 50% max profit. Broncos can make for an awfully rough ride ... . Ordinarily, I'd strangle this, but am hesitant to take on potential upside risk if this becomes a rocket sled sorta thang ... .
3 months ago
Comment: I had to putz with setups (as usual). Ultimately, I decided not to "hang naked on the bronco" (i.e., sell a put), so I went with a fairly wide short put vertical -- a Sept 16th 41/49 for a 1.37 ($137)/contract credit. Because I don't like riding roller coasters, I'll probably bail at 50% max.
3 months ago
Comment: This thing's a roller coaster, but I knew it would be going in. Today, I sold the long put of the spread for a small profit and then rolled the 49 short put down and out to the Oct 7th expiry for an additional .70 ($70) credit to give the trade a little more room to breathe. Additionally, the bid/ask in the options is quite wide, so just having the naked without the long will make adjustments easier.
3 months ago
Comment: Rolled the Oct 7th 46.5 to the Oct 21st 46 for an additional .76 credit. This is probably what I should have done in the first instance; the spreads in the weeklies are butt ugly wide ... .
3 months ago
Comment: Looking to exit this with a small profit tomorrow at the mid (a 2.95 debit), which would result in about a $45/contract net profit. I don't want this to turn into a loser, since managing a loser with these wide bid/asks will be a headache ... .
3 months ago
Trade closed manually: Filled at the open for a 2.95 debit; net profit $45/contract.
baerrus PRO
3 months ago
TWLO that is a recent IPO and already has weeklies huh?
Reply
NaughtyPines baerrus
3 months ago
Yep. Nasty wide spreads, though. I just couldn't pass on the ridiculous premium juiciness ... .
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