Not the buy point yet!!!First off, please note that this is not a good investment instrument. The leverage, and management fee, and volatility are just not for value investment. You need to buy it at the absolute low to profit. Anyone to buy this EFT need to be very cautious.
Secondly, using an options strategy may help, but the liquidity is a big concern. You pretty much see a loss at the moment you execute an order.
Well, after the BAD news from AMD, we will probably see more downside in the semiconductor sector. Will it dip and lower than the 2020 March low? Maybe. Although I do hold some hope that that case won't happen but who knows?
My best bet is that the low will be somewhere between $4.5 and $5 if you are looking for a long-term holding of this EFT.
For short-term, it will do it usually thing jump up-and-down between $8 and $12.
So here is my strategy
Buy 01/17/2025 $9 PUT & Sell 10/21/2022 $8 PUT (Diagonal Put Spread)
Buy 100 Shares @ $9.2 & Sell 10/21/2022 $11C Call (Covered Call)
Buy 10/21/2022 $10/$12 Debit Call Spread.
For the total price $920 (stock) + $350 (option contracts) = $2190
Expect profit/loss is somewhere between -$100 (if -15%) and $350(if +30%). The loss may be reduced with the "Roll" strategy, i.e. the short PUT needs to be rolled lower and later if the stock price hit $8.0. This strategy reduces the risk and maintains the profitability. I hope you will like it.
