While I didn’t host a Live Trading Session today, I am introducing three new trades — two new puts and a buy-write.
Each of the stocks we are trading today should be familiar to members, as we have successfully traded them in the past.
First, is a put trade on one of my favorite income stocks, Chewy (CHWY). The online pet retailer has thrived amid the pandemic, which spurred pet adoption rates and the trend toward online shopping. This volatile stock is up 7% today, and we are going with a 97.50 put.
Next up is General Motors (GM), which is also up big today following the launch of its new electric vehicle business unit BrightDrop. This new unit will offer GM’s commercial customers, such as FedEx (FDX), electric and connected products and software tools. Let’s sell the 45.50 put for a nice chunk of cash.
Finally, we have semiconductor stock Marvell Technology Group (MRVL). I expect the chip sector to show strong growth in 2021, regardless of what happens with the overall economy. I am recommending a buy-write trade on MRVL.
CHWY
Current Stock Price: $103.65
Action: Sell to open the CHWY Jan Monthly (1/15) 97.50 Put
Current Option Price: $ 0.75-$0.85
Recommended Limit: Set your initial limit order at $0.80. You can go as low as $0.65, but please don’t start there and always use limit orders.
Expiration: After the close on Friday, Jan. 15
Potential Rate of Return: 0.8% in four days, or 75% on an annualized basis, if this option expires worthless
GM
Current Stock Price: $46.98
Action: Sell to open the GM Jan Monthly (1/15) 45.50 Put
Current Option Price: $0.34-$0.37
Recommended Limit: Set your initial limit order at $0.35. You can go as low as $0.29 but please don’t start there and always use limit orders.
Expiration: After the close on Friday, Jan. 15
Potential Rate of Return: 0.8% in four days, or 70% on an annualized basis, if this option expires worthless
MRVL
Current Stock Price: $50.67
Action:
- Buy shares at market
- Sell to open the MRVL Jan Monthly (1/15) 51 Call for around $0.68
Cost Basis: $49.99
Expiration: After the close on Friday, Jan. 15
Potential Rate of Return: 2% in four days, or 182% on an annualized basis, if shares are called away