1/16/2022 Plan:
This week we look at RIOT Blockchain Inc. (Ticker: RIOT)
1/16/2022 Plan (continued):
- RIOT – Sell Jan 28 17 put for 0.36
- SBUX – Sell Jan 28 96 put for 0.90 (larger accounts) OR
- SBUX – Sell Jan 28 96/93 put spread for 0.40
- Prices are as of market close 1/14/2022, 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
1/16/2022 Commentary:
RIOT offers exposure to BTC and Crypto and I like having some in my account for diversification benefits. Not surprisingly, I prefer to take advantage of the high implied volatility compared to the actual underlying moves and selling options is a great way to do so. I am not currently long any shares, but have been selling puts for quite some time (past trades also have been done in MARA).
This is a straight forward Near Term, put sale, with reasonably high risk of assignment – I traditionally go further out, but with RIOT near 6 month lows, I like the risk/reward.
SBUX is definitely a “catch the falling knife” trade – which I generally avoid. I Do like SBUX long term and am personally ok with adding shares at 96, which is the trade I plan to take. For the spread, only put on what you are willing to lose as SBUX has been moving sharply down. An alternative is to wait until SBUX has a green day or two and then place a spread.
Feel free to Reach out with questions on this or anything else!
1/18/2022 Entry:
Sold RIOT 1/28 16 puts for 0.35. Sold SBUX 1/28 92 put for 0.49. Both have risk of assignment. Spread SBUX if not interested in shares.
1/22/2022 Update:
RIOT (and almost any crypto related item) is down and we are looking likely to take ownership of shares this week or have to roll.
The SBUX put is mostly flat and expires this Friday. Right now we have over $4 between the stock price and short put and I plan to hold to expiration to try and collect the full amount.
1/30/2022 Update:
The SBUX put expired worthless, for a nice $49 added to our accounts per put sold.
The RIOT puts did Not expire worthless and we had to either close for a loss, roll, or take 100 shares. I rolled. One nice thing about RIOT is the premium is quite high and you can often roll down, collect a credit and only go out a little bit. I bought back the 16 put for 1.76 and sold the Feb 11 15.5 put for 2.26. That’s a 0.50 ($50) credit And we went down another half dollar in the strike price, reducing our overall exposure.
2/6/2022 Update:
The RIOT puts are now worth 0.61 at the midpoint. Given we sold them at 2.26, that’s a $165 profit per put sold so far. They expire this week and I intend to hold them right through Friday to expire (ideally) worthless. If they drop towards the end of the week I will roll or take ownership. This idea was covered last week, but feel free to reach out with questions. We’re on track to capture a nice profit here.
2/13/2022 Close:
The RIOT puts expired worthless last week as RIOT closed at 18.37, well above our short put strike of 15.5. That is a $226 win for each put. These crypto-related names do move quite a bit, so keep your position size small. I assume any money at risk with RIOT, MARA, etc. is at risk of going to zero.
