I bought a BPS in Roper (ROP).

music selection:  “Bootleg Flyer” — Mudcrutch

weigh-in:  216.8 (0.4)

Roper Technologies (ROP) makes software and engineered solutions.  They are a Dividend Aristocrat with 27 consecutive years of distribution increases. The company is in a very long term uptrend but has traded sideways for about six months.  I think it is a good candidate for an in the money spread.  With shares trading at 387.23, I bought the 410/420 bear put spread with 16APR2021 expiry for 8.87 a share (5 spreads.)  I have 4,435 in capital at risk in the trade for 33 days and enjoy 5.88% downside protection against a price rally.  Should that protection not be breached, the full profit of 565 dollars will be earned in 33 days.  That is good for 12.7% or 141% annualized.

In my tIRA account, I bought $5,000 worth of Quantum Scape (QS).  The company is designed Solid State Lithium batteries.  These batteries are manufactured quite different from the graphene lithium ion batteries that dominate the EV and handheld electronics markets.  They have developed batteries that are smaller, more powerful, longer lasting, cheaper, and charge faster.  An EV with solid state batteries could go from a depleted charge to 90% charged in about 15 minutes.  This would make a long distance road trip in an EV very similar to one in a ICE powered car.  Volkswagon Auto Group is the largest shareholder and both an important supporter and default future customer.  Commercial production is slated to begin in 2024 and I think this technology could be game changing.  I bought 79 shares at 63.41 and I intend to hold without a stop loss at least until commercialization of the product.

I am on pace for $5,515 in trading profits for the month of March and April is shaping up nicely so far as well.  Today marks the halfway point of the month when I will do the next Transparency post.  I hope to have good numbers to report.

Devour your prey raptors!

Bear Put Spread ROP with 141% yield

Never miss another opportunity to devour prey!

2 thoughts on “Bear Put Spread ROP with 141% yield

  • March 16, 2021 at 3:54 pm
    Permalink

    Thanks as always for sharing your trades. I know the ROP trade will likely come out in your favor, but the risk/reward doesn’t seem especially enticing. ROP has traded above 410 for ~30-40% of the time over the last 8 months, so it doesn’t seem outlandish that it could rise again. Granted, I don’t think it will, but the 12% payoff of being right doesn’t seem like a great value for the risk… in my personal opinion, I’d estimate the likelihood of it being above your breakeven price as more than 12%. Just my take, don’t mean to be critical… I have been wrong many, many times!

    Reply
    • March 16, 2021 at 4:13 pm
      Permalink

      Thanks for being candid with me skeptic. It is a delicate balancing act to decide how much return to give up for how much downside protection. There doesn’t really seem to be a sweet spot.

      Reply

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