3/15/2020 Plan: Volatility remains very elevated, with circuit breakers being tripped in both the futures and daytime markets. There is no harm in sitting out the market another week, waiting for the markets to stabilize. For this week’s trade, we look at a name that should see some support as more and more people work from home – Slack (ticker: WORK).
3/15/2020 Plan (continued): Slack had earnings last week, although not too many people were even aware of regular earnings reports with the large moves in the market place. While the stock hit a low of 15.9, it bounced nicely along with the rest of the market at the end of the day, finishing at 19.59. We look to sell a put spread this week just above Friday’s low print.
- We sell the 20 MAR WORK 16/14 put spread for 0.30 at the midpoint. Spreads are wide as of close of business Friday and we may have to adjust the strikes.
- Intent is to hold until expiration. If bullish on Slack, one can take shares if it expires between the strikes
- Prices are as of market close 3/13/2020, actual fill and strikes may differ depending on Monday open, post will be updated accordingly
- All trades are for educational purposes and do not constitute advice
3/16/2020 Entry: Entered the trade on 3/17. Sold 2 15.5/14 put spreads expiring 3/27/2020 for 0.29
3/27/2020 Exit: As expected WORK remained well above the put spreads for the entire duration, ending on the 27th at 28.58. We collect the entire profit of $58 on only $242 of risk for a 24% return in less than two weeks.
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