Dupont

DuPont de Nemours, Inc., commonly known as DuPont, is an
American company formed by the merger of Dow Chemical and E. I. du Pont de Nemours and Company on August 31, 2017, and the subsequent spinoffs of Dow Inc. and Corteva. Prior to the spinoffs it was the world's largest chemical company in terms of sales.
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High Volume Options

I am applying various things I learned here on Leofinance to my trading habits. And one of them is @rollandthomas Smart Money Observational Trading. In other words he observes what the Smart Money is trading and starts his research and investigation there. His assumption is that this so called Smart Money is rich people who have access to information, which the average Retail Trader doesn't have, so we can't get their knowledge, but we can watch what they do with it, because option chains are public knowledge for now.

Dupont February 19th Calls: Selling Covered Call

Selling these Call Options give you obligation to sell someone your Dupont stock on a certain date, for a certain price, within a certain time period.

The option that caught my eye was the February 19th expiration 105 call, it had a trading volume of 157,000. contracts. Very impressive when most stock option chains have one or two strike prices of 2000-5000, and even a popular stock like Tesla or Apple wouldn't see volume of more then 20-50,000.

So the price at 17 days to expiration was 0.13 per share and the probability of being out of the money is 99%.
99% Probability of OTM.
Thats extremely high. Thats 99% chance of this being a winning trade. You don't get probabilities of success this high often and the premium while small, 0.13 or 13$ per contract, is 20x100x0.13 260$ premium for 20 contracts, and so if you own 2000 shares of Dupont sitting around in your brokerage portfolio collecting dividends and sell these contracts you are collecting 260$ of what I call free money.

In these days of free commissions you pay nothing. Since this isn't a stock, you don't have to worry about payment for order flow getting your bad prices. So I assume that these people were just Dupont stick holders lining up for free money.

There may have been other plays, you could sell a spread on this and buy a higher priced call as insurance, but then the profit would be lower, but it's not inconciebveable that you could sell one hundred contracts for 1300 and buy a more distant call 1-2 strikes higher and still gain 1000$, again with a 99% probability of success.

If you see another play let me know. I am all ears.

@shortsegments
 

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Please be advised that I own a diverse portfolio of cryptocurrency assets, and anything written or discussed in connection to cryptocurrencies– regardless of the subject matter’s content– may represent a potential conflict of interest. I wish to remain transparent and impartial to the cryptocurrency community at all times, and therefore, the content of my media are intended FOR GENERAL INFORMATION PURPOSES ONLY. Nothing that I write or discuss should be construed, or relied upon, as investment, financial, legal, regulatory, accounting, tax or similar advice. Nothing should be interpreted as a solicitation to invest in any cryptocurrency, and nothing herein should be construed as a recommendation to engage in any investment strategy or transaction. Please be advised that is in your own best interests to consult with investment, legal, tax or similar professionals regarding any specific situations and any prospective transaction decisions.
 

 

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