Today’s trade idea for option traders: Tupperware (trade closed)
With around $97 Tupperware reached in December 2013 its peak before its share prices started to decline mirroring the company’s problems. The drop in Tuppware’s price continued until March 2020 and with a low of just $1.20, it seemed that Tupperware would become to a penny stock and to a candidate for gamblers.
This makes this company seeming all the more impressive to report back as a turnaround. At least, the last earnings announcements were positive. If this turnaround will succeed, we will see in the future. At least this stock continues to climb against all odds. But for now, the share price is giving an opportunity for an options trade I’d like to introduce to you, folks.
The information I am giving you in this article is for informative purposes only and should not be treated as investment advice. The information presented would not be suitable for investors who are not familiar with exchange traded options. Any readers interested in trading activities related to the information in this article should do their own research and seek advice from a licensed financial adviser.
Type of a trade: Cash secured put
Alternatively: Bull put spread
Expiration: 18th December 2020 (42 days)
Premium for 1 option: between $200 and $215 on the day this article was published
Margin: apprx. $500 on the day this article was published
Pro for this trade:
Good momentum and a long signal (I’m using the ADX-Indicator) giving a higher probability that the price won’t be pushed under the strike in the next 42 days
Con for this trade:
Tupperware does not paying dividends at this moment. If the option land in the money, you’ll need to keep the stock and wait for prices of at least $28 in case you want to get out of the trade without a loss. In worst case you’ll need to wait months or even years. That’s why the bull put spread might be a better solution for some traders.
Result of this trade:
You could close the position on 4th December for about $15 – $20
Profit for 1 option: $185 – $200
Days in the trade: 28 (of maximum 42)