First off, please note that this is not a good investment instrument. The leverage, and management fee, and volatility are just not for value investment. You need to buy it at the absolute low to profit. Anyone to buy this EFT need to be very cautious.
Secondly, using an options strategy may help, but the liquidity is a big concern. You pretty much see a loss at the moment you execute an order.
Well, after the BAD news from AMD, we will probably see more downside in the semiconductor sector. Will it dip and lower than the 2020 March low? Maybe. Although I do hold some hope that that case won't happen but who knows?
My best bet is that the low will be somewhere between $4.5 and $5 if you are looking for a long-term holding of this EFT.
For short-term, it will do it usually thing jump up-and-down between $8 and $12.
So here is my strategy
Expect profit/loss is somewhere between -$100 (if -15%) and $350(if +30%). The loss may be reduced with the "Roll" strategy, i.e. the short PUT needs to be rolled lower and later if the stock price hit $8.0. This strategy reduces the risk and maintains the profitability. I hope you will like it.
Secondly, using an options strategy may help, but the liquidity is a big concern. You pretty much see a loss at the moment you execute an order.
Well, after the BAD news from AMD, we will probably see more downside in the semiconductor sector. Will it dip and lower than the 2020 March low? Maybe. Although I do hold some hope that that case won't happen but who knows?
My best bet is that the low will be somewhere between $4.5 and $5 if you are looking for a long-term holding of this EFT.
For short-term, it will do it usually thing jump up-and-down between $8 and $12.
So here is my strategy
- Buy 01/17/2025 $9 PUT & Sell 10/21/2022 $8 PUT (Diagonal Put Spread)
- Buy 100 Shares @ $9.2 & Sell 10/21/2022 $11C Call (Covered Call)
- Buy 10/21/2022 $10/$12 Debit Call Spread.
Expect profit/loss is somewhere between -$100 (if -15%) and $350(if +30%). The loss may be reduced with the "Roll" strategy, i.e. the short PUT needs to be rolled lower and later if the stock price hit $8.0. This strategy reduces the risk and maintains the profitability. I hope you will like it.
Comment:
For a longer run, keep rolling the short PUT and Short Call. Don't give up on the bull spread although it may look like it's eating up your profit. The true profit comes from the shares. The strategy only helps to reduce the cost.
Comment:
I just realized that I had the number wrong...
The total invested margin of this strategy is $920 (stock) + $350 (option contracts) = $1270
I don't know why I had a such ridiculous number there. Anyhow, I am expecting the SOXL may hit the target ($12) shortly and get back down.
The total invested margin of this strategy is $920 (stock) + $350 (option contracts) = $1270
I don't know why I had a such ridiculous number there. Anyhow, I am expecting the SOXL may hit the target ($12) shortly and get back down.
Comment:
I am still running this strategy. The original spreads did very good job to protect the value. Here is what I did before 10/21:
* Roll short put to a later expiry
* Roll covered call to a later expiry (same as short put)
* Buy a call (Same expiration day. Not call debit spread because IV is lower now, call is cheap)
*** Roll the long put from the strike price $9 to $10. To keep the performance of protective put, you have to keep rolling it to ITM when the IV is low and stock price was up too much.
Here is the showcase of my strategy optionstrat.com/OZUCzz2LvTB3?ref=steven...
* Roll short put to a later expiry
* Roll covered call to a later expiry (same as short put)
* Buy a call (Same expiration day. Not call debit spread because IV is lower now, call is cheap)
*** Roll the long put from the strike price $9 to $10. To keep the performance of protective put, you have to keep rolling it to ITM when the IV is low and stock price was up too much.
Here is the showcase of my strategy optionstrat.com/OZUCzz2LvTB3?ref=steven...