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Mastering the Art of Selling In-the-Money Puts: A Case Study with PLT$Palantir Technologies Inc.(PLTR)$  

$PLTR 20241227 81.0 PUT$ 

Analysis of PLTR Put Option

Trade Details:

Action: Sold a PLTR put option.

Strike Price: $81.

Premium Received: $5.62 (or $562).

PLTR Price at Trade: $80.50.

Days Until Expiry: 4 days.

Current Situation:

PLTR Current Price: $81.90.

Option Price: $2.

Analysis:

Current Profit:

The option price has decreased from $5.62 to $2, meaning you've lost $3.62.

However, since you received a premium of $5.62, you still have a net profit of $2.

Break-Even Point:

Your break-even point for this trade is at $77.38 ($81 strike price - $3.62 premium).

Since PLTR is currently trading at $81.90, you're above your break-even point.

Possible Outcomes:

PLTR ends at or above the strike price ($81) at expiry: You will keep the premium received ($5.62) as profit.

PLTR ends below the strike price ($81) at expiry: You will be assigned the shares and your profit will depend on the price of PLTR. However, since you're currently above your break-even point, you will still make a profit unless PLTR drops below $77.38.

Conclusion:

I have a net profit of $2 from this trade so far, as you are above your break-even point. However, the trade is still active and the outcome could change depending on the price of PLTR before expiry. It is recommended to monitor PLTR's price closely and consider adjusting the position based on your risk tolerance and market conditions.

The stock market can be a daunting beast, filled with unpredictable swings and complex strategies. But for savvy investors, there are opportunities to profit consistently even in volatile markets. One such strategy, commonly known as "selling in-the-money puts," offers a unique blend of potential gains and risk management. This approach, successfully implemented by many, can be a valuable tool to enhance your portfolio and achieve your financial goals.

Understanding the Basics

Selling in-the-money puts involves selling a put option that is currently in-the-money. This means the strike price of the option is lower than the current stock price. In simpler terms, you are essentially selling the right to someone else to sell you a certain number of shares at a predetermined price (the strike price) before a specified date (the expiration date).

Why Sell In-the-Money Puts?

There are several compelling reasons why selling in-the-money puts can be a profitable strategy:

Premium Income: You receive an upfront premium for selling the put option. This premium represents your profit potential, regardless of whether the stock price goes up, down, or stays flat.

Limited Risk: Your risk is limited to the strike price minus the premium received. If the stock price drops below the strike price, you are obligated to buy the shares at the strike price, but you still receive the premium as compensation.

Potential for Stock Ownership: If the stock price remains above the strike price at expiration, the put option will expire worthless, and you get to keep the premium. You may also gain ownership of the underlying stock at a lower price than the current market price.

A Case Study: PLTR

Many investors are successfully using this strategy to profit from the volatility of stocks like PLTR (Palantir Technologies). Here’s a breakdown of the strategy:

Identify a Stock: Choose a stock you believe will perform well or at least remain stable in the near future. PLTR, despite its volatility, has shown resilience in the past and remains a popular choice for this strategy.

Select an In-the-Money Put: Choose a put option with a strike price lower than the current stock price, offering the potential for premium income.

Disclaimer not an financial advise more of my own recordings 

@MillionaireTiger 

@CaptainTiger 

@TigerTradingNotes 

@CaptainTiger @TigerStars @Daily_Discussion 

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