Two new trades today.

music selection:  “Bedroom Hymns” — Florence & The Machine

I have a bullish trade (bull call spread) and a bearish trade (long dated put) today.  I’m going long on OKTA.  The company provides digital identity management tools.  It is in a nice uptrend and has become very necessary to firms in the new ‘mass work from home’ requirement of social distancing.  I’m of the opinion that there will be a lot more working from home on a permanent basis.  We may see “offices” that are composed entirely of conference rooms with no offices that remain mostly vacant.  OKTA will grow.

I opened an in the money bull call spread on OKTA at the 160 and 165 strikes.  With the 19JUN2020 expiry selected, the trade will be in force for about 39 days.  I got 325 pricing.  With shares of the underlying currently trading at 176.00, the trade has 6.25% downside protection before profits of 175 a contract are threatened.  Should that condition not be breached, the trade will yield 54% or 504% annualized.

I’m very bearish on Exxon Mobil (XOM).  I think demand for oil is going to be impaired for quite some time.  I also note the company has a payout ratio over 150%.  They have committed to borrow money to sustain the distribution.  Thus, the company is going to see declining fundamentals and a weakening balance sheet.  I bought the 15JAN2021 45 strike put for 6.30 a share.  I am targeting 90 days to re-evaluate this trade and hopefully exit with a nice profit.  If Coronavirus hits the markets again, the position will also provide some hedging.

Devour your prey raptors!

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Trades with yields up to 504%

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4 thoughts on “Trades with yields up to 504%

  • May 12, 2020 at 8:07 pm
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    Exxon right now is exhibit A for why I despise dividend stocks. They will bleed a lot more stock value than investors will get in dividends.

    The kicker with oil prices is whether enough workers at oil rigs, refineries, etc. get sick enough to disrupt supply.

    Reply
  • May 13, 2020 at 7:26 pm
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    looks like you chose well on this so far… XOM got creamed and OKTA is flat. Nice when both the long and the short positions pay off 🙂

    Reply
    • May 13, 2020 at 11:50 pm
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      I’ll take being “lucky” over being “smart” any day of the week and twice on Sundays.

      Reply

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