Entering a position in options trading is one thing. Managing it is another. Here’s a quick check on some of the recent options trading ideas to see how they’re working out. We’ll take a look at TIGR stock, Amazon stock, JPM stock, Nio stock, Target stock, DocuSign stock, NET stock and SQ stock.
Options Trading Idea: TIGR Stock Cash-Secured Put
Unfortunately, Chinese stocks have been crushed in the last month, and TIGR stock is no exception. It fell from 28 at the time of the article down to 17 in just a few weeks. As mentioned at the time, a sharp drop in the TIGR stock price was the biggest risk to capital. But not as bad as owning the stock.
Anyone buying 100 shares of stock would have lost around $1,100. The December cash-secured put, by comparison is down around $380. Painful, yes, but the premium received helped cushion the blow on this options trading idea.
It’s a tough call to stick with this options trading idea here. The situation changed regarding Chinese stocks with a lot of added risk due to government actions. The safest thing to do is cut losses and move on. Better to take a small loss now than a large loss later.
However, we are just below the expiration breakeven point of 17.95 on TIGR stock. There is a chance the stock could recover between now and December.
NIO Stock Synthetic Long
While Nio (NIO) also suffered from the Chinese exposure, it wasn’t nearly to the same extent as TIGR stock. The synthetic long trade on Nio stock is down around $470. The capital outlay for the position was a lot less so the leveraged position is hurting more. Recall that the capital outlay was just $50 per contract.
This options trading idea gives you the equivalent gains and losses of investors that purchased 100 shares of NIO stock. We are just witnessing the downside of that trade.
Nio stock looks slightly better than TIGR stock from a technical standpoint. The strength in EV stocks has this stock back above a rising 50-day moving average. However, NIO is showing a Composite Rating of just 56 compared to 86 for TIGR. A lot of that is related to a lack of earnings for Nio stock.
Options Trading Ideas For Target Stock And Amazon Stock
If Target stock remains below 270 by expiration, the options expire worthless and you lose the $35 premium paid. The max profit level is reached if Target stock hits exactly 280 at expiration. As a reminder, if it skyrockets above 290, it might be a good idea to cut your loss at that point. The broken-wing butterfly trade is a neutral to slightly bullish trade and a big move will increase the potential for a loss.
The iron condor on Amazon (AMZN) was a bust though. Because we sold the iron condor on Amazon stock, we needed it to stay between 3495.55 and 3804.55. This was a hit or miss trade and the gap down on earnings for Amazon stock caused this options trading idea to fail.
DocuSign Stock, NET Stock, SQ stock, and JPM Stock Looking Fine
The bull put spread on DocuSign (DOCU) is down around $20 per spread but looking OK. Right now, DocuSign stock is getting support at its 21-day line and its area of resistance around 290 from a year ago.
For this options trading idea, you achieve the 49% return on risk if DocuSign stock closes above 290 at the Aug. 20 expiration. The 290 level could also be an area to consider cutting losses or if the spread trades around 3.30.
On Cloudflare (NET), we looked at an in-the-money cash-secured put. This options trading idea for NET stock currently shows a profit of around $500. You could go for the maximum profit of $1,175 by holding through until the Sept. 17 expiration. But, I like the idea of taking early profits if the trade gets up to $600 profit.
The bull put spread on Square (SQ) is also working well. This options trading idea got the benefit of a huge earnings gap coupled with news of a proposed acquisition. As long as SQ stock maintains itself above 255 by the Aug. 20 expiration, you get the 108% return on risk.
Finally, earnings also helped the bull put spread for JPMorgan (JPM). JPM stock closed above the 150 strike of the short put so the spread expired worthless and the option trader kept the entire premium. The 8% return on risk isn’t much but not bad in just a week’s time.
Remember options are risky. Investors can lose 100% of their investment.
This article is for education purposes only and not a trade recommendation. Remember to always do your own due diligence and consult your financial advisor before making any investment decisions. Gavin McMaster has a Masters in Applied Finance and Investment. He specializes in income trading using options, is very conservative in his style and believes patience in waiting for the best setups is the key to successful trading. Follow him on Twitter at @OptiontradinIQ
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