9/20/2020 Plan: We look to sell a put (or spread) in Slack (Ticker: WORK)
9/20/2020 Plan (continued):
- WORK – Sell 1 of the 2 October 23.5 puts for 0.32 OR the 22.5 put expiring 9 October for 0.28
- WORK – Sell 2 of the 2 October 23.5/21.5 puts for 0.25
- Prices are as of market close 9/18/2020, 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
9/20/2020 Commentary:
Another trade in Slack? Well it just WORKs (sorry…). We have placed a few trades in Slack this year and we look at a few different ways to play it. For those willing to go long the shares, next week’s 23.5 put provides a 1.4% return in a couple weeks if it expires worthless. The 9 October put provides a 1.3% return in about 3 weeks. This is a smaller return in a longer time frame, however, it would get us long WORK at a lower level.
As a trade, the 23.5/21.5 puts next week for 0.25 provides a 14.3% return (25/175) in just a couple weeks.
The bullish case in Slack continues to be a bet on the work from home trend staying strong. This is not a blue chip company by any stretch – they don’t make money – but their sales continue to grow and as with most names of this type the expectation is that earnings will follow … eventually. Their recent earnings caused the name to drop and it has stabilized a bit providing an opportunity to sell a put $2 below the current price – almost 8%. The expected move is about 1.75, so this put is also outside of the expected range for next week.
Reach out with any questions on this or any other trade!
9/21/2020 Entry:
The overall market is down, but WORK is up today. We filled the 23.5 put next week for 0.23 and the 9 Oct 23.5 put for 0.38 to watch both. I prefer the latter as I am happy to take shares, but note the 23.5 strike is within the expected move the week of the 9th. It is outside the expected move for the 2nd
9/28/2020 Update:
Slack made a nice move up throughout the week and our puts are quite profitable. The 2 October put is worth 0.04 and can be closed at any time this week. The 9 October put is down to 0.12. One can take it off to re-allocate capital or hold it to try and collect a bit more premium. I’ll be doing the latter through at least this week.
10/4/2020 Update:
The 2 October put expired worthless, providing $23 for anyone that took the trade. The October 9 put is worth 0.04 and can be closed at any time this week for a healthy profit. If you need to free up capital, this is an easy one to take off – banking $34 in profit.
10/11/2020 Close:
Slack has had a nice run up recently and closed the week at $31 – our 23.5 put expired worthless, profiting a full $38 per put sold. This was a nice winner and quite easy to manage given the steady increase in the price of the underlying.
Reach out with any questions on this or any other trade!
