Trade ideas

Today’s trade idea for option traders: The Chemours Corp (trade closed)

(Last Updated On: 24. April 2021)

trade idea for option traders

After the Q4 2020 beat, Chemours jumped higher. CEO Mark Vergano: “Our COVID-19 response plan enabled Chemours to deliver robust Free Cash Flow as we prioritized cash and liquidity in a challenging demand environment. As the recovery gained momentum, we were ready to safely serve our customers and delivered fourth quarter sales performance nearly equal to pre-pandemic levels.” Good for us, the options traders. So let’s check this opportunity, folks.

Disclaimer:
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 (in the money)
Alternatively: Bull put spread
Expiration: 16th April (42 days)
Strike: $27
Premium for 1 option: between $220 and $240 on the day this article was published
Margin: apprx. $460 on the day this article was published

Pros for this trade:
– A long signal (I’m using the ADX-Indicator), giving a higher probability that the price would stay above the strike in the next 42 days
– A dividend of 3.88% on the day the trade idea was published, in case the price would fall below the strike and you would get the stock assigned (Source: finviz.com)

Cons for this trade:
– Low IV Rank and IV Percentile
– The long signal could turn out as a flash in the pan

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Result of this trade: you could close the position on 5th April 2021 for around $30
Realized profit for 1 option: $206 – $215
Days in the trade: 31 (of maximum of 42 days)

Summary: another bumpy trade like the two past ones (on Vuzix and Virtu Financial). This is showing us that there are no best indicators existing giving us a 100% opportunity. What’s important, is either to have a strict exit strategy once things start to go wrong or to accept to get the stock assigned. I usually prefer to get the stock assigned because I usually pick stocks which are paying dividends or which are growing stocks providing a probability to rise again once the fell below the strike. With this strategy I reduce the risk to catch a crappy stock which turns out as a total flop. But of course, this is my personal opinion and you can (and even you should!) do it your own way.

Would you like to learn how to trade options in a serious way without false promises and beyond the gambling ambitions of the masses? Then enroll in an online course on Udemy*. Also check my course I created to show you how to profit from crashes in the stock markets with reversal signals*.


*Affiliate link: when you click on this link, no additional costs would arise for you and the product or the service will not become more expensive. When you decide to buy the product or use the service, I’ll get a little benefit from the provider which I would reinvest to keep this blog alive.

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