The Trade at a Glance
- Underlying Stock: NUBURU Inc. ($NBIS)
- Strategy: Sell 1 Cash-Secured Put
- Expiration: March 21
- Strike Price: $45
- Premium Received: $640
- Margin Requirement: $4,500 (secured cash for 100 shares)
Key Metrics
- Max Profit: $640 (collected upfront).
- Return on Capital: 14.2% in about six weeks ($640/$4,500).
- Break-Even Price: $38.60 ($45 strike – $6.40 premium).
- Risk: Obligation to buy 100 shares of $NBIS at $45 if assigned.
Why This Trade Makes Sense
Income Generation
Selling puts generates instant premium income, offering a 14.2% return in about six weeks—a strong yield compared to traditional investments.
Stock Acquisition at a Discount
If assigned, you buy $NBIS at an effective price of $38.60, 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 $NBIS falls to zero, the potential loss is $4,500 – $640 = $3,860.
- Mitigation Strategies:
- Roll or close the put when it makes sense to secure profits or extend the trade for additional credit.
- Only trade if comfortable owning $NBIS long-term.
Why $NBIS?
NUBURU Inc. is an emerging player in industrial blue laser technology, offering growth potential but also market volatility. Selling puts on stocks with long-term upside potential allows traders to capitalize on price swings 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 $NBIS 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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