A credit put position was initiated in a $100,000 account by selling one Hims & Hers Health, Inc. (HIMS) May 16 $35 put option, collecting a premium of $425.
Trade Details:
- Underlying Asset: Hims & Hers Health, Inc. (HIMS)
- Trade Date: Apr 29, 2025
- Option Sold: May 16, 2025, $35 Put
- Premium Received: $425
- Account Size: $100,000
Rationale:
HIMS has been in focus due to strong growth in the digital health sector and bullish sentiment across the market. This short put takes advantage of elevated premiums and near-term expiration to generate income in a high-conviction range.
Key considerations:
- Strong Premium Yield: The $425 credit represents a high return relative to the capital at risk.
- Support Zone Near $35: Technical levels show the $35 area as potential support, adding a margin of safety.
- Time Decay Advantage: With just two weeks until expiration, theta decay rapidly accelerates in favor of the option seller.
Trade Outcome Scenarios:
- Stock Price Above $35 at Expiration: The put expires worthless, and the entire $425 premium is retained as profit.
- Stock Price Below $35 at Expiration: The position may be assigned, resulting in the purchase of 100 shares at $35 each. After factoring in the $425 premium, the effective purchase price becomes $30.75 per share. The strategy is to continue rolling the position forward to avoid assignment and collect additional credit until it eventually expires worthless.
Risk Management:
- Capital at Risk: $3,500 potential assignment value fits within the risk profile of a $100K account.
- Rolling Plan: The position will be monitored closely and adjusted if HIMS approaches or drops below the $35 strike.
Conclusion:
This trade captures premium from a high-probability setup, leveraging time decay and elevated IV. It reflects a disciplined option-selling approach that aligns with capital preservation and consistent income goals.
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