Sell -2 USO Put @ 1.04 Mar 18 8.5
With the stock price at the bottom of a potential cup and handle on the chart below, I am anticipating the stock price to reach the 9.88 range for a $105 profit of +5.61% (if I buy the stock outright and invest $1,872, which I didn't).
Purchasing the option sell Put at $1.04 for 2 contracts (200 shares) with expiration of March 18th, the E.T.P.C. tool tells me to target a $1.58 price for a potential maximum profit of $105 a +49.76% return (investing only $211, which I did).
I have expanded a piece of the Buy Shares Page chart above to illustrate the following:
If I had sold 3 contracts (300 shares):
the Breakeven price would drop .01
to make $105 the buyback price (closing the contract) would be .18 cheaper (1.58-1.40)
the % profit would fall from 49.76 to 33.33 (that's why I shoot for a $ amount like $105) -
I can't deposit 49% or 33% into my account, I can only deposit $105
Note: If I choose 4 contracts (400 shares) the option target price would fall .11 more. Add another contract to 5 and the target price only drops another nickel, so may not be worth the extra investment for 5 contracts, however 4 may be worth considering. Decisions, decisions.
I love using the E.T.P.C. tool!
Remember, that if the option expires on March 18, and I have not closed the position, I will have to buy 200 shares of USO stock.
Good Trading to All.