Shld stock options
It looks like its debt load is unsustainable and from here out its cash burn rate could be rapid. The story has been widely reported by the major news sources. What I want to discuss is an option strategy that could be an alternative to simply shorting the stock outright.
The implied volatility on the January at the money leaps is over When options are expensive we want to be sellers and be buyers when they are cheap.
One answer is to use the covered put strategy.
SHLD Stock | SEARS Stock Price Today | Markets Insider
Most investors are aware of covered calls, but covered puts are not nearly as popular. Our profit on the downside is limited and our risk on the upside is theoretically unlimited as with any short stock position.
Investors who are more risk averse can purchase an out of the money call for upside protection in the event Sears were to be bought out buy a rival at a premium or something like that. The IV on the The difference in IV between the calls and the puts is a whopping The calls are cheap because no one wants them.
The puts are expensive because everyone is buying them.
Sears Holdings Corporation (SHLD) Option Chain - Stock Puts & Calls - yfyrurusus.web.fc2.com
As always with option trades there are literally hundreds of different combinations of strike prices and expiration that could work, I selected the January LEAP as an example of what type of position can be constructed. The possibilities are almost limitless.
SHLD Stock Price - Sears Holdings Corp. Stock Quote (U.S.: Nasdaq) - MarketWatch
One of the best ways to take advantage of the high IV on the Sears puts is to be a seller and use a covered position. I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Long Ideas Short Ideas Cramer's Picks IPOs Quick Picks Sectors Editor's Picks. Try This Options Strategy Instead Of Shorting The Stock Jan.
Investing Ideas , Services , Department Stores , Options. Want to share your opinion on this article?
SHLD Option Chain | Sears Holdings Corporation Stock - Yahoo Finance
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