JCP has been hit by a lot of bad news. I will employ a medium term trade to generate at least 5% a month for 3-4 months. The trade is based on the premise that JCP will not go bankrupt in 3-4 months and there is an opportunity to generate money due to the high volatility on JCP options (around 100 for bi-weekly ones, and 60-70 on weekly ones).
I will document the trade here. With JCP at $8.23, I have started by selling 2 cash secured puts at $7.50 strike and 1 cash secured put at $7.00. Both expire on 11/22/13. This is a small trade which require $2200 of capital, which will be used to test the strategy. If it goes well for one month, I will increase capital to $10,000 or more.
The exit strategy will be to unwind the trades as soon as there is a doomsday news on JCP, which is low probability but can nonetheless occur.
Date: 11/8/13
Cash secured: $2200
Puts sold: $98
$7.5 strike, 11/23 expiry - 2 @ $0.37
$7 strike, 11/23 expiry - 1 @ $0.24
I will document the trade here. With JCP at $8.23, I have started by selling 2 cash secured puts at $7.50 strike and 1 cash secured put at $7.00. Both expire on 11/22/13. This is a small trade which require $2200 of capital, which will be used to test the strategy. If it goes well for one month, I will increase capital to $10,000 or more.
The exit strategy will be to unwind the trades as soon as there is a doomsday news on JCP, which is low probability but can nonetheless occur.
Date: 11/8/13
Cash secured: $2200
Puts sold: $98
$7.5 strike, 11/23 expiry - 2 @ $0.37
$7 strike, 11/23 expiry - 1 @ $0.24
Great trade! Expired! Surprised no other posts from you since. What's your next trade?
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