11/22/2020 Plan:
This week, we look at a couple ways to play Activision Blizzard (Ticker: ATVI) and a put sale idea.
11/22/2020 Plan (continued):
- ATVI – Sell the December 18th 70 put for 1+
- ATVI – Sell the December 18th 72.5/70 put spreads for 0.39 x2
- FITB – Sell the December 18th 23 put for 0.30
- Prices are as of market close 11/20/2020, 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
11/22/2020 Commentary:
ATVI has been pretty volatile recently with big intraday moves. You can see, though, that the implied volatility remains Above the historical volatility. In other words, the options are still relatively expensive – so we look to sell. The put sale gets us long shares, if assigned, at a level not seen since June. The put spread is a more straight forward play that the name will stay above 72.5 for the next 4 weeks. The potential return on the put spread is 18.5% (39/211) on our risk. Note that the bid/ask is a bit wide on the put sale, so don’t be surprised if we fill at a lower value. I’ll probably accept anything north of 0.70. As a reminder, one should stick with the put spread if they don’t want shares.
I am looking at the FITB 23 put in December for 0.30. This is not Fitbit! This is Fifth Third Bancorp, a midwestern bank. It pays a $0.27 dividend and if assigned, one would receive a 4.8% dividend on the cost basis (2300 – 30 = 2270. 27*4 = 108. 108/2270 = 4.8%). The thought would be to ‘wheel’ the stock if assigned and collect a decent yield in the meantime.
Reach out with any questions on this or any other trade!
11/23/2020 Entry:
We sold the ATVI Dec 11 71.5/69 put spread 2x for 0.35. This is 1 week earlier and lower strikes for a slightly lower credit. The ATVI Dec 18 70 put was also available for 0.69.
11/29/2020 Update:
The ATVI put spreads are worth only 0.11 at this point and can be closed at any time or held to try and capture additional decay. The cash secured put is now worth only 0.32 – we took in more than half the premium in the first week.
12/6/2020 Update:
The ATVI put spreads expire this week and most of the premium has been extracted. Close any time and enjoy the extra profits!
12/13/2020 Update/Close:
The ATVI put spreads expired worthless this week taking in the full 0.35 per put spread or $70 for the sizing recommended. This was a nice 16%+ return on our risk and never really challenged, making it an easy trade to manage. Enjoy the profits!
