PayPal – Importância da negociação de opções definidas pelo risco

Options trading can provide a meaningful addition to one’s portfolio when used in a disciplined manner. When used as a component of an overall portfolio approach, generating consistent monthly income while defining risk, leveraging a minimal amount of capital, and maximizing return on capital can be achieved. Options can enable smooth and consistent portfolio appreciation without guessing which way the market will move. An options-based portfolio can provide durability and resiliency to drive portfolio results with substantially less risk via a holistic beta-controlled manner. When engaging in options trading, specific rules must be followed, and one of the most important rules is to structure every option trade in a risk-defined (put spreads, call spreads, iron condors, etc.) manner.

PayPal (PYPL) was a recent example where the stock witnessed a massive meltdown from an ill-advised acquisition target (Pinterest) coupled with quarterly earnings that were deemed dismal. These two events culminated into a 35% slide from a 52-week high of $310 down to ~$200 post-earnings. Hence the importance of risk-defining all options trades to limit any downward stock movement beyond your protection strike. Risk-defined options trading prevents any losses beyond a specific strike price, avoids the assignment of shares, does not require a significant amount of capital, and does not potentially result in unrealized losses while soaking up capital with any share assignments.

Risk-Defined Options Trading

Risk-defined option trades are straightforward. Below is a theoretical example deploying a put spread on a stock that currently trades at $100 per share.

1. Sell a put at a $95 strike and collect $1 per share in premium – You take on the obligation to buy shares for $95 by the expiration date and receive $100 in option premium income.
2. Buy a put at a strike of $90 by using some of the premium received (e.g., $0.40 per share) – You have the right to sell shares at $90 a share by the expiration date.

In the above put spread scenario, premium income was $60 per contract ($1.00 – $0.40) and the maximum risk was $440 ($95 – $90 = $500 – $60 of net premium income). If the shares remain above $95 by the expiration date, then the option expires worthless, and the seller of the put spread locks in a realized gain of $60 or a return on investment of 13.6% ($60/$440). This is the essence of risk-defined options trading, where a minimal amount of capital is leveraged and return on investment is maximized.

No matter where the stock moves, losses are capped at $440 per contract even if the underlying stock falls to zero. This is the case due to the protection put leg that was purchased at the $90 strike. Therefore, in the worst-case scenario, if the stock were to fall to zero, you would be assigned shares at $95 and then sell the shares for $90 for a max loss of $5 per share less the $0.60 in premium, thus max loss of $440 per contract.

PayPal Case Study

PayPal (PYPL) experienced a dramatic fall from $296 on September 8th to ~$200 on November 10th after a two-step debacle of a mishandled acquisition target and a big earnings miss. This 32% downslide happened over the course of 8 weeks. A put spread of $245/$240 was sold on PayPal, and a near max loss was suffered. However, the $40 additional dollars per share in unrealized losses were avoided with the $240 protection strike. In a cash-covered put situation, shares would’ve been assigned at $245, and a subsequent ~20% loss would’ve been incurred. Cash-covered puts can not only be dangerous in situations like this but can also tie up substantial amounts of capital with unrealized losses. Therefore, a risk-defined put spread was essential in order to protect downside risk and avoid any capital-intensive assignment of shares.

Figure 1 – The importance of risk-defined options trades such as put spreads, call spreads, and iron condors which is the foundation of options trading – Serviço de notificação comercial e Ferramenta de triagem de opções

10 regras para uma estratégia de opções ágeis

Uma abordagem disciplinada a uma carteira ágil baseada em opções é essencial para navegar em bolsas de volatilidade e contornar as quedas do mercado. Uma série de medidas de proteção devem ser implementadas se as opções forem usadas para impulsionar os resultados do portfólio. Ao vender opções e gerenciar um portfólio baseado em opções, as seguintes diretrizes são essenciais (Figura 3):

1. Negocie em uma ampla variedade de tickers não correlacionados
2. Maximizar a diversidade do setor
3. Distribua contratos de opções por várias datas de vencimento
4. Venda opções em ambientes de alta volatilidade implícita
5. Gerencie negociações vencedoras
6. Use negociações com risco definido
7. Mantém um nível de caixa de aproximadamente 50%
8. Maximize o número de negociações, para que as probabilidades correspondam aos resultados esperados
9. Coloque a probabilidade de sucesso a seu favor (delta)
10. Dimensionamento adequado de posição/alocação comercial

Conclusão

An options-based portfolio can provide durability and resiliency to drive portfolio results with substantially less risk via a holistic beta-controlled manner. When engaging in options trading, specific rules must be followed, and one of the most important rules is to structure every option trade in a risk-defined (put spreads, call spreads, iron condors, etc.) manner. Therefore, a beta-controlled, options-based strategy is key, and the market meltdown in September reinforces why appropriate risk management is essential. An options-based approach provides a margin of safety while circumventing drastic market moves while containing portfolio volatility.

PayPal (PYPL) was a recent example where the stock witnessed a massive meltdown from an ill-advised acquisition target coupled with poor quarterly earnings. These two events culminated into a 35% slide from a 52-week high of $310 down to ~$200 post-earnings. Hence the importance of risk-defining all options trades to limit any downward stock movement beyond your protection strike. Risk-defined options trading prevents any losses beyond a specific strike price, avoids the assignment of shares, does not require a significant amount of capital, and does not potentially result in unrealized losses while tying up large sums of capital with share assignments.

Noah Kiedrowski
Contribuidor INO.com

Divulgação: Stock Options Dad LLC é uma empresa registrada de consultoria de investimentos (RIA) especializada em serviços e educação baseados em opções. Não há relações comerciais com nenhuma empresa mencionada neste artigo. Este artigo reflete as opiniões da RIA. Este artigo não pretende ser uma recomendação de compra ou venda de qualquer ação ou ETF mencionado. O autor incentiva todos os investidores a realizarem suas próprias pesquisas e due diligence antes de investir ou tomar qualquer ação na negociação de opções. Fique à vontade para comentar e fornecer feedback; o autor valoriza todas as respostas. O autor é o fundador e membro gerente da Stock Options Dad LLC – uma empresa registrada de consultoria de investimentos (RIA). www.stockoptionsdad.com definindo o risco, alavancando uma quantidade mínima de capital e maximizando o retorno do investimento. Para conteúdo mais envolvente e baseado em opções de curta duração, visite Stock Options Dad LLC's YouTube canal. Por favor, direcione todas as perguntas para [email protegido]. O autor detém ações da AAPL, AMZN, DIA, GOOGL, JPM, MSFT, QQQ, SPY e USO.

Source: https://www.ino.com/blog/2021/11/paypal-importance-of-risk-defined-option-trading/