Trade ideas

Today’s trade idea for option traders: Radian Group Inc (trade closed)

(Last Updated On: 12. June 2021)

trade idea for option traders

Never heard about this company? To make it succinct: Radian Group Inc. engages in the mortgage and real estate services business in the United States.  The company was founded in 1977 and is headquartered in Philadelphia, Pennsylvania. Today I’d like to introduce you the next trade opportunity on options, folks. It’s another trade in the money due to lack of implied volatility in this stock. But nevertheless, it could be a good chance for someone. So let’s check it out.

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: 18th June (56 days)
Strike: $26
Premium for 1 option: between $195 and $200 on the day this article was published
Margin: apprx. $360 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 cross the strike level in the next 56 days
– Additionally to the long signal, the stock is in an uptrend and crossed the high of the last movement after the brief correction
– A dividend of 2.03% 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 of 1 and IV Percentile of 4
– The trend of this stock could end during the trade

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Result of this trade: I’ve got the stock assigned about one week before the expiration of the option. But even without the premature assignment, the price of the stock would land in the money anyway.
Realized profit for 1 option: around $195 – $200
Days in the trade: 49 (of total 56)

Summary: Actually, I’m glad this happened because if you check my other trades, you will see that none of my trades landed in the money since I started with my blog (or maybe just one of them). And this could cause a belief that options trading is too simple and too good to be true. But this is an example of a real trade where you can see that things not always are going according to a plan. So what happens now? Well, I’ll keep the stock and will get around 2% dividend until the stock reaches the former strike level where I can sell it.

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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