The Trade at a Glance
- Underlying Stock: NuScale Power Corp. ($SMR)
- Strategy: Rolling a Cash-Secured Put
- Action: Buy to close Feb 14 $25 Put and sell Feb 21 $24.5 Put
- Expiration: February 21
- Strike Price: $24.50
- Premium Received: $24 Credit
- Margin Requirement: $2,450 (secured cash for 100 shares)
Key Metrics
- Net Credit from Roll: $24
- Break-Even Price: Adjusted lower due to rolling.
- Risk: Obligation to buy 100 shares of $SMR at $24.50 if assigned.
Why This Trade Makes Sense
Managing Position Efficiently
Rolling the put extends the trade, adjusting the strike price and collecting a small additional credit.
Stock Acquisition at a Discount
If assigned, you buy $SMR at an effective price lower than the initial trade, optimizing entry levels.
Capital Efficiency
A $100K account can maintain flexibility while still generating premium income.
Risk Management
- Max Loss Scenario: If $SMR falls to zero, potential loss is $2,450 minus collected premiums.
- Mitigation Strategies:
- Roll further or close when it makes sense to adjust risk exposure.
- Only trade if comfortable owning $SMR long-term.
Why $SMR?
NuScale Power operates in the small modular reactor (SMR) industry, offering innovation in clean energy. Selling puts on stocks with long-term potential allows traders to generate income while managing downside risks. Always analyze earnings, sector trends, and market conditions before trading.
Final Thoughts
Rolling options is a strategic move to manage risk and maximize returns. For a $100K account, this $SMR put roll maintains premium collection while adjusting risk exposure.
Stay Updated!
Follow our blog for more strategies, and never risk more than you’re willing to lose. Options involve risks—consult a financial advisor if needed.
#OptionSelling #OptionCredits #PassiveIncome #TradingStrategies #OptionsRolling #StockMarket #Investing #FinancialFreedom
Disclaimer: This post is for educational purposes only. Past performance isn’t indicative of future results. Options trading carries significant risk.
📩 Subscribe now for actionable insights to grow your portfolio! 🚀📈