Safer way to Be long BABA DOTM 80 Put
Hi everyone,
China this am came out with a better tone toward their tech industry and markets.
Assuming that geo political events do not get worse between the USA vs China.
I am making a Long term asset accumulation bet on Alibaba
1) I discuss straight stock asset ownership
vs
2) Getting an income by selling the deep out of the money 80 strike September put for $9.15 resulting in a
11.43% ROI as of this writing, also providing us a safety of margin from current $97 price to 70.85 assignment cost
2 Outcomes
a) stocks goes up and stay above the 80 strike by the September Expiration date we pocket the 11.43% or $9.15
b) Stocks tank below 80 get called and I own Alibaba stock the asset, at a price I already decided was a comfortable and good support around (assignment price $80-9.15)=70.85
Hope it helps this strategy is only valid with two things in mind
1)buy asset you love and want to keep for the long term
2)be prepared to hold if it goes below 70.85 and be confident enough of the long term 5-20 years for the underlying stock as an asset in this case Alibaba
Hope it helps
Marc
China this am came out with a better tone toward their tech industry and markets.
Assuming that geo political events do not get worse between the USA vs China.
I am making a Long term asset accumulation bet on Alibaba
1) I discuss straight stock asset ownership
vs
2) Getting an income by selling the deep out of the money 80 strike September put for $9.15 resulting in a
11.43% ROI as of this writing, also providing us a safety of margin from current $97 price to 70.85 assignment cost
2 Outcomes
a) stocks goes up and stay above the 80 strike by the September Expiration date we pocket the 11.43% or $9.15
b) Stocks tank below 80 get called and I own Alibaba stock the asset, at a price I already decided was a comfortable and good support around (assignment price $80-9.15)=70.85
Hope it helps this strategy is only valid with two things in mind
1)buy asset you love and want to keep for the long term
2)be prepared to hold if it goes below 70.85 and be confident enough of the long term 5-20 years for the underlying stock as an asset in this case Alibaba
Hope it helps
Marc
Decision Tools and Ideas by Traders for Traders
Reward buy put at 2.80 ROI= credit recv 9.15-2.80= 6.35/80 strike=7.93% ROI . Thank you Mr Market and lets run for now...The DOTM Trifecta selling puts is a great strategy for asset accumulation or income but if there is a real delisting risk ...run and lets access later, one can always re enter a dangerous position