The Trade at a Glance
- Underlying Stock: CleanSpark Inc. ($CLSK)
- Strategy: Sell 3 Cash-Secured Puts
- Expiration: February 14
- Strike Price: $11
- Premium Received: $150 ($50 per contract)
- Margin Requirement: $3,300 (secured cash for 300 shares)
Key Metrics
- Max Profit: $150 (collected upfront).
- Return on Capital: ~4.55% in under two weeks ($150/$3,300).
- Break-Even Price: $10.50 ($11 strike – $0.50 premium).
- Risk: Obligation to buy 300 shares of $CLSK at $11 if assigned.
Why This Trade Makes Sense
Income Generation
Selling puts generates instant premium income, leading to a 4.55% return in less than two weeks—a strong return compared to traditional investments.
Stock Acquisition at a Discount
If assigned, you buy $CLSK at an effective price of $10.50, offering a lower entry for bullish investors.
Efficient Capital Utilization
A $100K account can efficiently allocate capital for cash-secured puts while maintaining liquidity for other trades.
Risk Management
- Max Loss Scenario: If $CLSK falls to zero, the potential loss is $3,300 – $150 = $3,150.
- Mitigation Strategies:
- Set a mental stop-loss if $CLSK approaches $11.
- Roll the put to a later expiration for additional credit if needed.
- Only trade if comfortable owning $CLSK long-term at $11.
Why $CLSK?
CleanSpark is a Bitcoin mining and energy solutions company, benefiting from industry growth. The stock’s volatility boosts option premiums, making put-selling an attractive strategy. Always research earnings, sector trends, and market conditions before trading.
Final Thoughts
Selling cash-secured puts is a disciplined approach to generating income while defining risk. For a $100K account, this $CLSK trade offers a balance between risk and reward, leveraging volatility for premium collection.
Ready to Explore Options?
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.
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Disclaimer: This post is for educational purposes only. Past performance isn’t indicative of future results. Options trading carries significant risk.
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