Fool article on Hortonworks

I have no idea how I missed this, but I like it: https://www.fool.com/investing/2017/07/09/better-buy-hortonw…

The fairly absurd reaction to the leadership changes (which I feel were handled beautifully) is currently providing an incredible bargain on the shares. I couldn’t resist adding to my already very large position today.

Bear

Bear,

I think the management change signifies some turmoil at HQ–they tagged it
with an increase in upper end of revenues to soften the news, but still added
an element of FUD that is impossible for me to handicap.

I added a few shares today, but my conviction has dropped.

Best,
PI

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The fairly absurd reaction to the leadership changes (which I feel were handled beautifully) is currently providing an incredible bargain on the shares. I couldn’t resist adding to my already very large position today.

Have a look at the August $12.5 options. There are pretty good premiums right now. I sometimes will buy a trading positions and then simultaneously sell a covered call and a short put position. For example, buy 100 shares of HDP for $1255 (current quote) and sell 1 Aug $12.50 call and sell 1 Aug 12.50 put for a combined premium of around $200. One of these 2 options will expire worthless while the other will either add another 100 shares for $1250 or sell your trading position for $1250.

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I sometimes will buy a trading positions and then simultaneously sell a covered call and a short put position. For example, buy 100 shares of HDP for $1255 (current quote) and sell 1 Aug $12.50 call and sell 1 Aug 12.50 put for a combined premium of around $200.

You can as well buy and write 200 shares or sell 2 put contracts. The economic outcome is same as the strategy you have outlined. So why you would do a covered call and a put writing simultaneously? In your case, you may incur 2 trading commission vs one commission.

You can as well buy and write 200 shares or sell 2 put contracts. The economic outcome is same as the strategy you have outlined. So why you would do a covered call and a put writing simultaneously? In your case, you may incur 2 trading commission vs one commission.

The reason is that I also sold $12.50 covered calls that expire tomorrow. Received $0.20. If shares get called away then I have a month to wait for a lower price to replace the shares.

I am not concerned about commissions because I have plenty of free trades in my account.

Chris

Your post talks about both call and put being Aug options. I hope you know what you are dong.

Your post talks about both call and put being Aug options. I hope you know what you are dong.

Yes, I understand the mechanics and the risks. I sold the Aug options in addition to the Jul covered calls in order to extract a little extra from the Jul options with only 1 day before expiration.

Chris