There was no Options Income Blueprint Live Trading Session this week, as I did not want to take on any undue risk by putting on new positions ahead of the Federal Reserve meeting. This was decidedly the right move.
Although the Fed raised rates 0.75 basis points as expected, stocks have sold off sharply. Clearly, there were still too many bulls out there!
Today, I am recommending we get off the sidelines and sell a silly put on Block (SQ), which we have traded twice successfully so far this year.
Block, the company formerly known as Square, is headed by Jack Dorsey, co-founder and former CEO of Twitter (TWTR). The change in name reflects the fintech’s shift to a focus on the blockchain and cryptocurrency.
At one time, SQ was the most traded stock in the Options Income Blueprint service. We began selling puts on it in 2018, back when the company’s focus was growing its credit card-reader business into a payment ecosystem for small- and medium-sized businesses.
Between April 2018 and July 2020, we traded SQ successfully 35 times in a row, earning $2,524 in cash.
I must admit that I am not a huge fan of Block’s shift in focus from a fundamental perspective. That said, I am intimately familiar with the stock after all these years of trading it. So, when the opportunity for a short-term trade pops up, I take it. But be aware that this is not a stock I would consider holding longer term.
Please do not chase the trade by accepting less premium than the “go as low as” price recommended below. Work your limit orders but exercise patience and let the trade come to you.
Current Stock Price: $55.28
Action: Sell to open SQ Sep Week Five (9/30) 49 Put
Current Option Price: $0.42-$0.44
Recommended Limit: Set your initial limit order at $0.43. You can go as low as $0.36, but please don’t start there and always use limit orders.
Expiration: After the close on Friday, Sept. 30
Potential Rate of Return: 0.9% in eight days, or 40% annualized, if this option expires worthless