Today’s trade idea for option traders: Old Republic International (trade closed)
(Last Updated On: 22. February 2023)
Never heard about Old Republic International (ORI)? This traditional insurance company is considered as Berkshire Hathaway of the insurance industry. As a value company, you can expect from this stock steady and increasing dividends. Although the business model of ORI similar to any other insurer, this company has demonstrated the ability to compound book value and earnings over the long term. That’s why I’m happy to get a chance for an options trade on ORI. The reason for this is that if you get this stock assigned, the risk you would lose money with it in a long-term perspective is pretty low. Check it out, 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 (in the money)
Alternatively: Bull put spread
Expiration: 16th April (36 days)
Premium for 1 option: between $200 and $240 on the day this article was published
Margin: apprx. $300 on the day this article was published
Pros for this trade:
– A pretty strong long signal (I’m using the ADX-Indicator), giving a higher probability that the price would hit the strike in the next 36 days
– A dividend of 4.07% 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 in case you don’t want the stock to get assigned
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Also, I can recommend you to check Finscreener.org for quotes, news, analyst recommendations, earnings ratings, stock and opportunity screeners, and a lot of other features.
Result of this trade: Well, this trade was one of those rare ones stepping out of line. Just a couple of days after opening the trade, I got the stock assigned before option’s expiration. This happens pretty rarely. To me, it happens about once a year.
Realized profit for 1 option: as I got the stock assigned, I could keep the full premium of around $220.
So what’t next? I’ll keep the stock until it reaches the level of at least $24 which was the strike. I do this to demonstrate, how long it might take until you can sell the assigned stock without a loss.
Update: on 22nd of April, the price reached the level of $24 so I could sell the stock without a loss
Days in the trade: 43
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