07-03-2020, 09:12 AM
(07-02-2020, 10:40 AM)crimsonghost747 Wrote: I do not know how conservative you guys would rate this. Probably not very as we are talking about airlines.The structure of the trade is sound enough and conservative enough, if you are comfortable with the underlying at the possible assignment prices it's a good trade IMO.
But please do let me know your thoughts. This is one of my first long term option trades, as you guys know I have lots of short term ones under my belt (1-2 weeks) but now I went for almost half a year. This is also my first time "laddering" multiple puts on the same underlying with different strikes.
Spirit Airlines (SAVE) - December 18 puts
1x $15 - premium was $362
2x $10 - premium was 2x $146
Stock stays above $15: I make $654.
Stock is between $10 and $15: 1 put gets assigned. I own 100 shares with an average price of $15. With the premiums taken into account, break even price for these 100 shares is $8.46.
Stock is below $10. I get assigned 300 shares with an average price of $11.67. With the premiums taken into account, break even price for these 300 shares is $9.49.
Overall, I'm quite confident that the airline industry will survive. I'm getting quite a decent amount of premiums for a small amount risked ($3500 total) and of course I still have the possibilities of closing this early or rolling it forward.