To The Moon

This week's put strategy picks

1 $Eli Lilly(LLY)$

sell $LLY 20250117 580.0 PUT$

Exercise price: 580; Expiration date: January 17, 2025; Volume: 500; Total turnover: 3.02 million; Stock price at transaction: 578.62;

Annualized return: 6.94%

Company introduction:

Eli Lilly was incorporated in Indiana in 1901. The company discovers, develops, manufactures and markets important pharmaceutical products.

Recent news:

Lilly last month reported better-than-expected results for the second quarter and first half of 2023. Lilly's first-half revenue was $15.272 billion, up 7% from a year earlier, the data showed. Revenue in the second quarter was $8.312 billion, up 28% from a year earlier. The GLP-1 dual-target drug Tirzepatide showed strong performance, and Tirzepatide continued to increase volume after being approved by the FDA in May 2022, with sales of $1.548 billion in the first half of 2023. Lilly expects sales of the drug to top $4 billion in 2023. Lilly also updated its 2023 guidance in this quarterly earnings report. It increased its guidance by $2.2 billion and expects full-year revenue of $33.4 billion to $33.9 billion.

Strategy analysis:

Eli Lilly's stock price continues to rise with no sign of a correction, and the company's price-to-earnings ratio of 83 is far higher than its peers. In the peak stage, the institution chooses to sell the put option in succession to ensure the maximum profit. In addition to the strike price 580, 590 also has options transactions: $LLY 20250117 590.0 PUT$

2 $Ford(F)$

sell $F 20231020 10.0 PUT$

Exercise price: 10; Expiration date: October 20; Volume: 10,400; Total turnover: 41,700; Stock price at transaction: 12.26;

Annualized return: 2.34%

Company introduction:

The Ford Motor Company was founded in Delaware in 1919. The company operates in three segments: Automotive, Transportation and Ford Credit.

Recent news:

With the current collective bargaining agreement set to expire at midnight on Thursday, the United Auto Workers union said it was still far apart on key priorities for a New Deal and that if it failed to reach an agreement, it would not be able to do so. On Friday (15th), a strike will be launched at specific plants of the three major automakers. The president of the UAW said that if the two sides fail to reach an agreement, the union will launch a series of strikes at some plants of the three Detroit automakers. "It would be the first time in our history that we could strike the big Three at the same time."

Detroit's Big Three carmakers had already made a partial concession, agreeing to pay raises of up to 20 per cent over four and a half years for 146,000 US auto workers, a sharp increase from the original offer.

Anderson Economic Group estimates that a strike by the United Auto Workers would halt production at Detroit's three major automakers and could cost automakers, suppliers and workers more than $5 billion, as well as potentially disrupting the auto supply chain. In 2019, a 40-day strike cost GM $3.6 billion.

American consumers, for their part, could face rising car prices. As of the end of August, the three major U.S. automakers had about 70 days of inventory. Analysts at AutoForecast Solutions said the three-week strike would lead to a reduction in inventories, triggering higher prices.

Strategy analysis:

At present, Ford's stock price is in the bottom range, and the market expects that the impact of the automotive supply chain disruption will not exceed the epidemic and geopolitical disputes, and $10 is still a solid support level.

3 $Home Depot(HD)$

sell $HD 20231117 305.0 PUT$

Exercise price: 305; Expiration date: November 17; Volume: 9,675; Total turnover: 3.22 million; Stock price at transaction: 328.17;

Annualized return: 6.3%

Company introduction:

Home Depot is the world's largest home improvement retailer. The company offers customers a wide range of building materials, home improvement products, lawn and garden products, and decoration products, and offers a number of services, including home improvement installation services and tool and equipment rental.

Recent news:

Evercore ISI: Raised Home Depot (HD.N) price target to $370 from $360.

Strategy analysis:

The current 200-day moving average price is 309, and the agency expects Home Depot to pull back not below the 200-day moving average.

4 $ON Semiconductor(ON)$

sell $ON 20231117 80.0 PUT$

Exercise price: 80; Expiration date: November 17; Volume: 3,248; Total turnover: 460,000; Stock price at transaction: 96.41;

Annualized return: 7.25%

Company introduction:

On Semiconductor Corporation, together with its subsidiaries, is in the business of energy efficient electronic drive innovation. The company's portfolio of products includes power and signal management, logic, discrete, and custom device company designs. The company manufactures and markets advanced electronic systems and a wide range of semiconductor components to address design portfolio needs.

Recent news:

ON Semiconductor's (ON.US) chief accounting officer sold 3,800 common shares valued at approximately $374,300

Strategy analysis:

The current 200-day moving average price is 82, and the agency expects the pullback of ON Semiconductor to be no lower than the 200-day moving average.

5 $Advanced Micro Devices(AMD)$

sell $AMD 20231215 70.0 PUT$

Exercise price: 70; Expiration date: December 15; Volume: 2,000; Total turnover: 98,000; Stock price at transaction: 105;

Annualized return: 1.42%

Company introduction:

Advanced Micro Devices, Inc. was founded on May 1, 1969. The company is a global semiconductor manufacturer with factories all over the world

Recent news:

Chip designer Arm is set to make its initial public offering on Nasdaq later on Thursday, valuing the company at $54.5 billion in the largest U.S. initial public offering since late 2021. Cornerstone investors include top customers such as Apple, Nvidia, Alphabet, AMD, Intel and Samsung.

Strategy analysis:

Arbitrage strategies that minimize risk.

6 $Apple(AAPL)$

sell $AAPL 20230922 157.5 PUT$

Exercise price: 157.5; Expiration date: September 22; Volume: 1,077; Total turnover: 17,200; Stock price at transaction: 177.15;

Annualized return: 3.03%

Company introduction:

Apple designs, manufactures, and sells smartphones, personal computers, tablets, wearables, and accessories, and provides a variety of related services.

Recent news:

On September 12, the United States time, Apple held a new product conference, launched six new products, respectively, two watches Apple Watch Series 9 and Apple Watch Ultra 2, and four phones of the iPhone 15 series.

Strategy analysis:

After the previous Apple release, the stock price will continue to be depressed for more than two weeks, but before Apple because of the rumor that China's state-owned enterprises banned the stock price fell sharply, the decline space is limited, and conservative institutions choose to sell out-of-bid put options. Activist institutions choose to sell in-bid puts: $AAPL 20231027 185.0 PUT$

7 $Match(MTCH)$

sell $MTCH 20231027 37.0 PUT$

Exercise price: 37; Expiration date: October 27; Volume: 6,200; Total turnover: 229,000; Stock price at transaction: 42.9;

Annualized return: 8.39%

Company introduction:

Match Group, Inc. is a leading provider of dating services with products available worldwide.

Recent news:

Adding the stock to its U.S. analyst Watch list, jpmorgan picked MTCH as a "value" stock, raising its price forecast to $60 from $55 with an "overweight" rating.

An overview of this week's selling put strategies:

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Strategy introduction:

Selling a put option is a common option trading strategy.

A put option, as its name suggests, represents the right to short a stock. A trader buying a put option usually indicates a bearish trend in the stock, while selling a put option indicates that the trader wants to buy the stock at a certain strike price, or believes that the stock price will not fall below a certain strike price for a certain period of time, thereby earning a premium.

Sell the put option to receive the right to profit, and assume the obligation to exercise the right to buy the stock at a future agreed time.

Strategy advantages: sell to get the right fee, when the option expires, when the stock price is higher than or equal to the exercise price, there is no need to accept the positive stock.

Strategy disadvantages: When the option expires, when the stock price trend is not as expected and falls below the exercise price, it is still necessary to buy the positive shares at the exercise price, that is, to buy the shares above the positive share price.

Example:

When the stock price of Coca-Cola was 40 in that year, Buffett sold 5 million shares with an exercise price of 35 put, and obtained a royalty of $1.50 per share (that is, $750). If the expiration stock price was not lower than 35, the put would be cancelled and Buffett would earn 7.5 million. If the expiration stock price reached 35, Buffett would buy 5 million shares of Coca-Cola according to 35. And since the first 1.5 earned, the equivalent of the cost per share is only 33.5.