The Trade at a Glance
- Underlying Stock: NuScale Power Corp. ($SMR)
- Strategy: Roll Cash-Secured Put
- Old Expiration: February 21
- New Expiration: February 28
- Strike Price: $24.50
- Additional Premium Received: $55
- Total Premium Collected: Aggregated credit from rolling the position
- Margin Requirement: $2,450 (secured cash for 100 shares)
Why Roll This Position?
Income Enhancement
Rolling the put option allows us to collect an additional $55 in premium, increasing the total income from this position.
Time Extension
Extending the expiration date to February 28 gives the stock more time to move in our favor while keeping the same strike price.
Managing Risk and Flexibility
By rolling the option, we avoid potential assignment and continue to manage the position proactively based on market conditions.
Key Metrics Post-Roll
- Total Premium Collected: Initial premium + $55 additional credit
- Break-Even Price: Strike price minus total premium collected
- Risk: Obligation to buy 100 shares of $SMR at $24.50 if assigned
Next Steps
- Monitor the $SMR position and evaluate further rolling opportunities if the stock remains near the strike price.
- Consider closing the position early for a profit if premiums decline.
Final Thoughts
Rolling options is a strategic approach to maximize premium income and manage risk. This $SMR roll extends the trade while adding credit, maintaining a strong balance between income and risk management.
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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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