TRADE IDEA: CDE COVERED CALL/NAKED SHORT PUT

2016年8月28日

Covered Call Metrics:

Buy 100 shares stock at 13.68
Sell Oct 21st 14 call
Whole Package: 12.36 db
Max Profit: $164 (if called away at $14)
ROC: 13.3%

Alternative:

Sell Oct 21st 12 put
Probability of Profit: 71%
Max Profit: $70 (if filled at the mid price)
Max Loss: $1140 (if you do nothing and stock goes to $0 by expiration)

Notes: The short put play would be either a naked premium selling play or a precursor to initiating a covered call. For the former, look to roll down and out for duration and credit when the price of the short put equals 2x what you received in credit; otherwise, leave the option alone and look to take off in profit at 50% max or above. For the latter, take the assignment at 12 or roll the put down and out for duration and credit to shoot for assignment at a more favorable price. Given the underlying's trajectory and the amount of "air below", I'd probably opt for just selling the short put here. A lot of miners are looking somewhat weak here ... .