Selling November KO put options

[farmerjohn1324]

What do you think?

I believe KO (Coca-Cola) is a great example of a company who's stock has been hit hard by the corona crisis without any actual damage to the company long-term.

Things should be back to normal by November.

 

[hafez50]

Lol. Its back near $50 only down from an all time high of $59 in Feb. Where were you 2 1/2 weeks ago when it was $36?. You could have sold the Nov $30's

 

[farmerjohn1324]

Lol. Its back near $50 only down from an all time high of $59 in Feb. Were were you 2 1/2 weeks ago when it was $36?. You could have sold the Nov $30's

Yea maybe I'm too late.

Wouldn't I want to sell calls at a higher price, though?

 

[hafez50]

Why? Volatility was huge when it was $36 so you could have gotten a pretty penny selling the puts 2 1/2 weeks ago. And if they put it to you at $30 your fine with that . Now at $50 with a lower vix if you sell the 45's you could easily get it put to you if we tank again. But if it goes back to $36 you'll have a nice lose on paper. Obviously you could have sold the $35's $2 1/2 week ago daring them to put it to you. So if you brought in $3.50 your cost basis would have been $31.50.

 

[FrankInLa]

This is why this website is called ELITE trader. Baron was probably sky high when he came up with that name

Why? Volatility was huge when it was $36 so you could have gotten a pretty penny selling the puts 2 1/2 weeks ago. And if they put it to you at $30 your fine with that . Now at $50 with a lower vix if you sell the 45's you could easily get it put to you if we tank again. But if it goes back to $36 you'll have a nice lose on paper. Obviously you could have sold the $35's $2 1/2 week ago daring them to put it to you. So if you brought in $3.50 your cost basis would have been $31.50.

 

[farmerjohn1324]

Why? Volatility was huge when it was $36 so you could have gotten a pretty penny selling the puts 2 1/2 weeks ago. And if they put it to you at $30 your fine with that . Now at $50 with a lower vix if you sell the 45's you could easily get it put to you if we tank again. Put if it goes back to $36 you'll have a nice lose on paper. Obviously you could have sold the $35's $2 1/2 week ago daring them to put it to you. So if you brought in $3.50 your cost basis would have been $31.50.

I was thinking selling something higher.

Selling a put is a bullish prediction.

 

[hafez50]

Well you'd love to sell time and time again and just rake the premium in. But the chances are much higher you get the stock put to you now that when i was $36. Are you ok with owning it at $45?

 

[farmerjohn1324]

Well you'd love to sell time and time again and just rake the premium in. But the chances are much higher you get the stock put to you now that when i was $36. Are you ok with owning it at $45?

No I wouldn't be okay at $45. I thought it was a safe bet that it would be above present levels by November.

I chose to sell put instead of buy call for the premium advantage, but that's not the main reason for the prediction. That's just an added bonus. The main reason is because I think the price would go up.

I wouldn't mind selling a ridiculously high price like $75.

 

[hafez50]

Your looking this wrong. The Nov 45 outs are around $2.75. If it goes to $42 you could get the stock put to you at $45. You cost basis would be $42.25. Why do you think its better to sell a put when the stocks higher? If Ko is $75 and you sell a 70 put for $2 it stock goes to $68 you could own it. Owning Ko at $70 a lot more dangerous than owing at $45

 

[farmerjohn1324]

Your looking this wrong. The Nov 45 outs are around $2.75. If it goes to $42 you could get the stock put to you at $45. You cost basis would be $42.25. Why do you think its better to sell a put when the stocks higher? If Ko is $75 and you sell a 70 put for $2 it stock goes to $68 you could own it. Owning Ko at $70 a lot more dangerous than owing at $45

I'm not betting that the stock will be $45. If that's what happens, then my prediction was wrong.

I'm thinking it will be more like $55 by then. In any event, I believe it's a relatively safe bet that it will be higher than it is today in November.