As opposed to the winter and spring, this summer 2021 wasn’t really good for option sellers as the implied volatility was too low. Actually, it’s still too low. But with Unum Group, we now finally got a stock with a higher implied volatility as usual. That’s why I’d like to introduce my trade idea on this one. So let’s check it out!
Disclaimer:
The information I am giving you in this article is for informative purposes only and should not be treated as investment advice. The information presented would not be suitable for investors who are not familiar with exchange traded options. Any readers interested in trading activities related to the information in this article should do their own research and seek advice from a licensed financial adviser.
Type of a trade: Cash secured put
Alternatively: Bull put spread
Expiration: 17th December (70 days)
Strike: $27.5
Premium for 1 option: between $155 and $170 on the day this article was published
Margin: apprx. $500 on the day this article was published (Please keep in mind: the margin size depends on your account size. The smaller your account size the higher the margin requirements. The margin I’m publishing here is the margin based on my account size. Therefore, it could also happen that with a small account, you would see a margin of more than $2000)
Pros for this trade:
– Based on the signal I get (ADX-Indicator), the price could continues to climb and to stay above the strike so we can get rid of the put option when the time is right
– A very good dividend of 4.4% on the day the trade idea was published, in case the price would fall below the strike and you would get the stock assigned (Source: finviz.com)
– A relative low Fear & Greed Index of 36
Cons for this trade:
– A pretty low IV Rank (around 26) and IV Percentile which could be better (around 44%)
– The resistance area around the levels of $28 could be too strong and the price could bounce below the strike level
– As trading with options is also a dealing with probabilities, every assumption could turn out as a wrong estimation so at the end the stock would land in the money and you would close the position with a loss (in case you don’t want to keep the stock)
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Result of this trade: t.b.a.
Realized profit for 1 option: t.b.a.
Days in the trade: t.b.a.
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