Short Strangle of F stock, Recovery trade (Potential income loss -13.35% in 172 days)
On November 24, 2023, I sold additional short strangle on F stock.
At the start of November, I got assigned 100 shares with F stock at 14. A position I originally started back in July 2023.
As I’m unable to sell above my current break-even price to receive enough premium, I decided to sell a covered call option near the strike price + sell an additional put option for additional premium - forming the so-called short strangle
This is not trading advice. Investments in stocks, funds, bonds, or cryptos are risk investments and you could lose some or all of your money. Do your due diligence before investing in any kind of asset.
here is the trade setup:
SLD 1 F Dec29'23 9.5 PUT 0.07 USD
BOT 1 F Nov24'23 10.5 CALL 0.01
SLD 1 F Dec29'23 11 CALL 0.16
What happens next?
On the expiry date, December 29, 2023, F is trading under $11 but above $9.5 per share - options expire worthlessly and I keep premium - if F trades under $9.5 on the expiry date, I risk getting assigned an additional 100 shares and will have to buy them paying $950. If so I will hold already 200 shares with F, but my average buy price will be $11.75. Already better.
In case F trades above $11, I risk my 100 shares getting called away and book an actual loss of $187. Which also is better than the current loss of $306.
Anyhow, if any of the sides - I will try to roll them forward for credit.
As I already have collected a premium of $1.13 per share, my break-even price for this trade is $14-$1.13= $12.87
In total: 13 trades since July 10, 2023
Options premium: $113