Trading Upwork (UPWK)

 

Selling Cash-Secured Puts on Upwork (UPWK): Diving In for Steady Income (October 2024 Update)

Greetings, fellow options traders! Welcome back to Sharkwater Trading, where we navigate the market's currents to find opportunities for steady returns. Today, we're setting our sights on Upwork (UPWK), the leading online platform connecting businesses with freelance talent.

Why UPWK?

Upwork boasts a strong position in the gig economy, and its recent performance reflects that. The company reported solid Q1 2024 results with revenue growth and increasing profitability. However, the stock market can be fickle, and UPWK's price can fluctuate. This presents a chance for us to utilize a strategy that benefits from both bullish and neutral market movements: selling cash-secured puts.

The Cash-Secured Put Play on UPWK

We'll focus on the January 2024 $10 strike put. By selling this put, we're essentially making a bet that UPWK's share price will stay above $10 by expiration in January. Here's the breakdown:

• Action: Sell to Open 1 UPWK January 2024 $10 Put Contract (per share)
• Collateral: You'll need to have at least $10 x 100 (contract size) = $1,000 in your brokerage account for each put contract sold. This cash acts as collateral and is only taken away if UPWK falls below $10 by expiration.
• Potential Profit: The maximum profit you can earn is the premium you receive for selling the put option. As of today (October 16, 2024), this premium could be around $[premium amount] per share (be sure to check your specific broker for live quotes). This translates to $[premium amount] x 100 (contract size) = $[total profit] for each put contract sold.
• Potential Loss: If UPWK's price falls below $10 by expiration, your put option will be exercised, and you'll be obligated to buy UPWK shares at $10 per share. This could result in a loss if the stock price stays below $10 for an extended period.

Who is this Strategy For?

This strategy is suitable for investors who:

• Are bullish or neutral on UPWK's long-term prospects.
• Seek to generate income through option premiums.
• Are comfortable potentially owning UPWK shares at a discounted price ($10 in this case) if assigned.

Important Considerations

• Earnings: Upwork is scheduled to report Q3 earnings on November 6, 2024. Implied volatility might increase around this date, potentially affecting option prices.
• Market Volatility: Broader market movements can impact UPWK's price. Be prepared to adjust your position if needed.
• Time Decay: As expiration approaches, the time value of the option decreases. This can affect your potential profit even if UPWK stays above $10.

Remember: Options trading involves risks. Carefully consider your risk tolerance and research the strategy thoroughly before making any trades.

Conclusion

Selling cash-secured puts on UPWK offers a potential way to generate income and potentially acquire shares at a discount. However, it's crucial to understand the risks involved and actively manage your position.

What are your thoughts on UPWK? Would you consider this put-selling strategy? Share your insights in the comments below!

Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Please consult with a qualified financial advisor before making any investment decisions.

CRSP

 Quick post while I'm travelling.  Watch, research and make a decision on CRISPER Therapeutics.  Some good information coming out on the use of the Cas9 technology.  Cathy Wood just bought another 39000 shares yesterday.  I am long the stock and short put Oct 25 $45 calls.  45 seems to be where they have been keeping it on Friday expirations.

Happy Trading

ACHR Jan 2027 $3 Calls: A Discount Dip or Something Else?

 

Traders, listen up! We've got our eyes on some interesting action in ARCHER (ACHR) calls expiring in January 2027. Specifically, the $3 strike calls are currently priced at a discount compared to both out-of-the-money (OTM) calls with higher strike prices and in-the-money (ITM) calls with lower strike prices.

This is a bit unusual. Normally, calls with a strike price closer to the current stock price tend to be more expensive than those further out. So, what's going on here?

There are a couple of possibilities:

• Market Mispricing: It's possible this is a temporary glitch in the options pricing. The market might be overlooking something, creating a short-term buying opportunity for savvy traders.
• Change in Investor Sentiment: A shift in how investors view ACHR's future prospects could be affecting the price of these calls. Perhaps there's some news or rumors that haven't been fully priced in yet.
• Strategic Play by Options Whales: Large traders, sometimes known as whales, might be accumulating positions in these specific calls for their own reasons. Their buying activity could be driving the price down temporarily.

Here's what we recommend doing before diving in:

• Do your research: Understand what's driving ARCHR's current stock price and what factors could affect it between now and January 2027.
• Analyze the greeks: Look at the delta, gamma, and theta of these calls to understand their sensitivity to price movements and time decay.
• Consider the alternatives: Compare the pricing of these $3 strike calls to other ACHR calls with different strike prices and expiration dates. See if the discount holds up.

Remember, options trading can be complex and carries significant risk. This is not financial advice. Before making any trades, do your own due diligence and consider consulting with a financial advisor.

Stay tuned! We'll be keeping a close eye on ACHR and these $3 strike calls. If we see any major developments, we'll be sure to share them with you.

Disclaimer: I am not a financial advisor and this is not financial advice. Please consult with a financial advisor before making any investment decisions.