The Trade at a Glance
- Underlying Stock: Intel Corp. ($INTC)
- Strategy: Sell 1 Cash-Secured Put
- Expiration: March 21
- Strike Price: $25
- Premium Received: $390
- Margin Requirement: $2,500 (secured cash for 100 shares)
Key Metrics
- Max Profit: $390 (collected upfront).
- Return on Capital: 15.6% in about six weeks ($390/$2,500).
- Break-Even Price: $21.10 ($25 strike – $3.90 premium).
- Risk: Obligation to buy 100 shares of $INTC at $25 if assigned.
Why This Trade Makes Sense
Income Generation
Selling puts generates instant premium income, offering a 15.6% return in about six weeks—a strong yield compared to traditional investments.
Stock Acquisition at a Discount
If assigned, you buy $INTC at an effective price of $21.10, significantly below the strike price.
Capital Efficiency
A $100K account can allocate capital for cash-secured puts while keeping liquidity available for other trades.
Risk Management
- Max Loss Scenario: If $INTC falls to zero, the potential loss is $2,500 – $390 = $2,110.
- Mitigation Strategies:
- Set a mental stop-loss if $INTC approaches $25.
- Roll the put to a later expiration for additional credit if needed.
- Only trade if comfortable owning $INTC long-term.
Why $INTC?
Intel is a leading semiconductor company with strong fundamentals. Selling puts on established companies with long-term growth potential helps traders capitalize on market volatility while managing risk. 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 $INTC trade offers a strong balance between risk and reward, leveraging market movement for premium collection.
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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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