$GME. Selling 2023 $2 Puts For 50¢
Seeking Alpha Analyst Since 2020
Stonks only go up! Canadian Microcap investor.
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Summary
- The point of this article is to get FEEDBACK.
- I'm writing on SA. My second option is writing on reddit.
- Selling $2 puts that expires Jan 2023 yields 50¢.
Why GME won't go bankrupt:
1) Michael Burry and Ryan Cohen have taken large positions. They are looking to turn around the company. They have too much to lose for this to go bankrupt. They put a lot of money in this and they have a vision. Too much skin in the game to fck it up essentially.
2) They have recently released good results about ecommerce. I don't need to expand on that, you know it. Others have talked about it.
3) I am pretty sure they are going to issue shares at this elevated price and completely get rid of their debt. They have $100 million in share offering they can do? This will elevate stock price.
Knowing all this why don't we sell $2 puts that's selling for 50¢. That's 25% of purchase price. This is unheard of for a stock that's gonna be trading at $20-$40. I feel like intrinsic value is 8-$10. Perhaps $15. No more than that. Anyone interested in buying GME can get it for $1.50 ($2-0.5) rather than buying shares. What's the problem? Why is it so high? Why is the premium so high? I feel this is such a guaranteed way to make money. Because the only reason I feel the premium is so high because of the volatility and high short interest and high implied volatility and high trading volume. But none of this affects the company going into bankruptcy.
I am pretty sure the premiums will drop affect this short squeeze is over and stock starts trading normal again. We can buy back our puts so we don't have to lock in our money inside nor do we have to keep a position if we don't feel the prospects of the company.
Why isn't this is a steal? Why shouldn't we sell $2 puts for 50¢?
Analyst's Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I will buy puts if I feel there is no downside risk.
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