3/21/2021 Plan:
A few trade ideas this week, including a higher risk/reward put spread in Beyond Meat (Ticker: BYND)
3/21/2021 Plan (continued):
- BYND – Sell Apr 16 120/115 put spread for 0.68
- PSTH – Sell Apr 16 22.5/20 for 0.35+
- Prices are as of market close 3/19/2021, actual fill and strikes may differ depending on Monday’s open, post will be updated accordingly.
- All trades are for educational purposes and do not constitute advice
3/21/2021 Commentary:
With bond yields increasing, the market is having a bit of trouble deciding whether it wants to rally or sell off. We are seeing a bit of a rotation from growth names to value names and there has been a move up in financials and energy and some of the meme stocks have sold off.
VIX has tested the 20 level and we’re now back up above it – We have had some great returns recently and still have plenty of positions on. It is ok to put on a bit smaller size and be more selective with our trades while we let the market decide on a direction. For many traders, this could be a week to sit out. If you are looking for some slightly higher risk/higher reward put spreads, we have two to choose from:
While I am long term bearish in the name, there is a lot of support for BYND above 120 and the high IV makes the 120/115 a good sale. This put spread is also outside of the expected move. The name can move a lot (up over $5 on Friday), so smaller size is ok.
The other trade is a return to PSTH. We use lower strikes this week and look to get $35 for a 2.50 wide spread or 16% return on our risk. Personally, I’ll add shares if we end between 22.5 and 20. I am already long shares and would take more. It has been a good name to right far out of the money calls against as well – I’m planning to sell Apr 16 35 calls against a portion of my long for 0.90 and will be content to let them get called away.
Reach out with any questions on this or any other trade!
3/22/2021 Entry:
Sold the PSTH Apr 16 23/20 put spreads for 0.42. The BYND put spreads were not available. We will look for opportunities to enter later in the week.
3/28/2021 Update:
PSTH sold off along with a lot of other SPAC names. We are down on the position but plan to hold through this week and allow theta to work for us as our short strike is still out of the money. I am willing to take shares at this level and sell calls against it, if needed.
The BYND spreads were available later in the week and with the sell off, one could still put it on this week.
4/4/2021 Update:
PSTH is basically flat after another week of trading, which was great for our position. The put spreads are now worth about 0.15. These can be closed or held to try and capture more decay. I’m doing the latter. PSTH can move pretty quickly, so if you need to remove risk, you could some or all of this off and book the win.
4/10/2021 Update:
PSTH moved up nicely this past week and the spreads are almost worthless. You can close the short put for 0.05 at the mid-point. This name trades in nickel increments, so go ahead and close when you can this week.
4/18/2021 Close:
The PSTH put spreads expired worthless and could have been taken off for 0.05 at any time or left to expire. Leaving short option positions on at the end of the day, does leave you with the risk that the market gaps down after 4PM Eastern and you could be assigned shares. The safest play is to simply close. These put spreads provided a nice 16.3% return in our short holding period, adding nicely to our profits.
Reach out with any questions on this or any other trade!
