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TP Says...
Tuesday, September 22, 2020
In a blow to bulls and 401K plans, the SPX was briefly down on the year yesterday as the political temperatures heated up with the passing of Ruth Bader Ginsburg.  Even the mighty FAANG stocks got whacked, although three of the five (AAPL, AMZN and NFLX) eventually closed up on the day along with the broader market. FB and GOOGL weren’t so lucky.  And of those two, GOOGL had a worse day.  In fact, GOOGL has been sucking wind after hitting an all-time high at the start of September.  It’s dropped the equivalent of two standard devs since then, which is about 16%.  But the US has been through worse, and this sell-off might be an opportunity for contrarian bulls.  GOOGL’s earnings are coming on Oct 26, and that’s helping to push its IV higher. Even though GOOGL has a 36% IV rank, its options can make interesting short premium strategies.  If you think that GOOGL will catch up with the rest of its mega cap cousins and are willing to take risk through earnings, you might consider a bullish strategy in it.  The short put vertical that’s long the 1310 put and short the 1320 put in the Oct weekly expiration with 38 DTE is a bullish strategy that collects a credit 1/3 the width of its strikes, has a 78% prob of making 50% of its max profit before expiry, and that generates $2.90 of positive daily theta.
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