good luck to you…maybe the BMR has more legs, but I have no idea.
I (obviously) have no idea either. But I am quite confident that volatility is here to stay for the next 6 months or so. That is a two-edged sword. High prices for puts and calls is good. Increased odds of having option exercised is not good. If we look at the UPST July 29 calls, the Friday close was $26.03
There are strike prices at $0.50 increments.
The 27.5 yields 4.1% of the closing price and requires a 5.6% share price increase to trigger the option. The 28 strike yields 3.4% but requires a 7.6% share price increase. The risks are share price changes greater than 5.6 or 7.6%. If one is committed to owning the shares, a price decrease of that size is not (?) an issue. A slight beat on the upside isn’t much of a problem either. It is the 10% or 15% increase that causes angst. Buy the shares back and risk a subsequent price drop? Or not buy back and watch the shares (maybe) run away (FOMO)? No free lunches.
We can add a layer of complexity by also selling the puts. With puts and calls with same expiration dates, only one would possibly be exercised. But of course it adds the risk of having to buy below the expiration date market price (but of course below Monday’s opening price). But it is a sort of forced sell high, buy low mechanism. What can we get for about $1 per share? $1.03 can be fetched for $24.50 strike price put. We could sell both the $27.50 call and the $24.50 put and pocket $2.09 for the $26.03 valued shares. For one week. 8%. (Not really 8% since in an IRA one needs $24.50 cash per share in the account… But if one wants to hold cash in these times, …).
So, 1,000 shares, $26,000 in UPST and $24,500 cash to cover the puts, gets you $2,090 for the week. Check the math and multiply by 52 and see if it covers your dining out expenses.
Also check out the New Paradigm Investing board: https://discussion.fool.com/retirementdough-june-portfolio-updat…. 100% invested in UPST. 19 post thread. KC was/is a piker.
What does the slang term Piker mean?
1 : one who gambles or speculates with small amounts of money. 2 : one who does things in a small way also : tightwad, cheapskate. In case that term has not been used in your neighborhood since 1950-ish.
KC, who has to go check the electrical project-of-the-day his This Old Houseand could use $2,000 a week…