An options trade was placed in a $100,000 account by selling one BULLFROG AI Holdings Inc. (BULL) May 16 $15 put option, collecting a premium of $235.
Trade Details:
- Underlying Asset: WeBull (BULL)
- Trade Date: Apr 25, 2025
- Option Sold: May 16, 2025, $15 Put
- Premium Received: $235
- Account Size: $100,000
Key considerations:
- High Implied Volatility: Elevated IV boosted premium at the $15 strike, enhancing credit received.
- Near-Term Expiration: With just two weeks to expiry, time decay works in favor of the seller.
- Supportive Technicals: The $15 level aligns with a technical support zone, improving probability of expiring worthless.
Trade Outcome Scenarios:
- Stock Price Above $15 at Expiration: The put expires worthless, and the full $235 credit is retained as profit.
- Stock Price Below $15 at Expiration: The position may be assigned, requiring the purchase of 100 shares at $15. After accounting for the $235 premium, the effective entry price would be $12.65 per share. However, the strategy is to continue rolling the position forward to collect more premium until it eventually expires worthless.
Risk Management:
- Defined Capital Exposure: Potential assignment at $1,500 is well within the risk parameters of a $100K account.
- Active Monitoring: The position will be reviewed regularly, with plans to roll out or down if price action warrants adjustment.
Conclusion:
This trade represents a high-yield, short-duration income opportunity using a proven option-selling approach. The position will be managed with the objective of maximizing premium while minimizing assignment risk.
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