We were cautious this week ahead of the September consumer price index report. It tanked the market like the August report, with a core CPI reading that was the highest in four decades. Unlike last time, though, stocks came roaring back to close the session higher.
Our cautiousness led us to close our Bristol-Myers Squibb (BMY) put early at a modest profit. In hindsight, this was premature. But, in this market, capital preservation is the name of the game.
Now that CPI is behind us, let’s put some money to work with two new trades on stocks we’ve traded successfully numerous times this year. We’re going with a post-earnings trade on Delta Air Lines (DAL) and a silly put on The Trade Desk (TTD).
Delta Air Lines (DAL)
Current Stock Price: $31.31
Action: Sell to open the DAL Oct Monthly (10/21) 29.50 Put
Current Option Price: $0.35-$0.38
Recommended Limit: Set your initial limit order at $0.36. You can go as low as $0.27, but please don’t start there and always use limit orders.
Expiration: After the close on Friday, Oct. 21
Potential Rate of Return: 1.2% in eight days, or 56% on an annualized basis, if this option expires worthless
The Trade Desk (TTD)
Current Stock Price: $51.22
Action: Sell to open the TTD Oct Monthly (10/21) 45 Put
Current Option Price: $0.46-$0.55
Recommended Limit: Set your initial limit order at $0.50. You can go as low as $0.40 but please don’t start there and always use limit orders.
Expiration: After the close on Friday, Oct. 21
Potential Rate of Return: 1.1% in eight days, or 51% on an annualized basis, if this option expires worthless