While there is no live trading this week, I want to put on a post-earnings trade in United Airlines (UAL).
The stock is up sharply today after the company reported better-than-expected Q3 results, including revenue that exceeded pre-pandemic levels, and offered an upbeat forecast for the fourth quarter.
I want to take advantage of still-elevated volatility levels to sell a put. Our strike is roughly 10% out of the money, providing a degree of protection following today’s big run-up.
While the potential rate of return just meets our target, the goal is to close the position early, thus boosting our annualized return.
Current Stock Price: $39.93
Action: Sell to open the UAL Oct Week Four (10/28) 36 Put
Current Option Price: $0.28-$0.30
Recommended Limit: Set your initial limit order at $0.29. You can go as low as $0.24, but please don’t start there and always use limit orders.
Expiration: After the close on Friday, Oct. 28
Potential Rate of Return: 0.8% in 10 days, or 29% annualized, if this option expires worthless