On March 25, 2025, an options trade was executed in a $5,000 account by selling one D-Wave Quantum Inc. (QBTS) March 28 $8.50 put option, receiving a premium of $45.
Trade Details:
- Underlying Asset: D-Wave Quantum Inc. (QBTS)
- Trade Date: March 25, 2025
- Option Sold: March 28, 2025, $8.50 Put
- Premium Received: $45
- Account Size: $5,000
Rationale:
D-Wave Quantum Inc. has been in focus due to recent developments:
- Quantum Blockchain Innovation: The company announced a new blockchain architecture leveraging quantum computing techniques, enhancing security and significantly reducing energy consumption. (MarketBeat)
- Stock Volatility: Despite advancements, QBTS stock saw a 25.22% decline in the past week following a 5 million share sale, raising concerns about potential dilution. (TipRanks)
This environment of heightened volatility presented an opportunity to generate income through options selling.
Trade Outcome Scenarios:
- Stock Price Above $8.50 at Expiration: The put option expires worthless, and the full $45 premium is retained as profit.
- Stock Price Below $8.50 at Expiration: The seller may be assigned 100 shares of QBTS at $8.50 each, requiring a capital allocation of $850. Factoring in the $45 premium, the effective purchase price would be $8.05 per share.
Risk Management:
With a $5,000 account, potential assignment would represent a significant allocation. To mitigate risk:
- Capital Allocation: Ensure sufficient liquidity to cover a possible share purchase without overleveraging.
- Exit Strategy: Monitor price movements and consider closing the position before expiration if adverse market conditions arise.
Conclusion:
This trade exemplifies a strategic approach to options selling, leveraging market volatility to generate premium income while maintaining a disciplined risk management strategy.
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