AMC - Options Strategy 🧐AMC is a buy in this area as it has fallen back into the Golden Window 0.618 - 0.786 retracement on stock split news.
So you can simply buy the stock however if you would like to know how to buy AMC below the current market low, here's how you can do it - by selling puts.
Please note selling puts is a bullish strategy.
Here is our work for today: (I have changed the image and it does not show Delta but instead "Probability Of Profit."
"AMC
I have started selling Jan 2024 LEAP puts as AMC has tumbled on stock split news, back into the Golden Window sub 0.618 retracement.
This tumble will have slightly increased IV Implied Volatility which is good for selling options that benefit from IV contraction which will occur when the trend cools off.
Note I only sell options with Delta equal or lower than -0.3. Preferably in the -0.2 to -0.3 range. This is a decimal for chance of landing In The Money.
If you look on the image - I have sold the $5 and $8 strike.
The highlighted $5 strike has a Delta of $0.21 and so this means it has a 21% chance of landing In The Money above $5 minus the premium according to the Black and Scholes pricing engine.
And so lets say I sold the put where the "mid" of the spread is now for $2.85 (you can only trade in $0.05 increments). I have selected that buy at the top and you can see it shows the buyer's Break Even is $2.15
And so there is 21% chance of the buyer hitting break even @ $2.15
That is also my break even. Anywhere above that and i'm making profit.
If at Jan 2024 expiry AMC is anywhere above $5 I win the total premium of $2.85 per share and so because an option contract is for 100 shares; I win $285 per option contract.
This method is a good way to balance the risk in my portfolio. AMC is a solid stock, probably won't go bankrupt and buying deep in the Golden Window there is very little risk that I can lose money. If it is put to me I can simply hold the stock until in profit.
if it expires below $2.15 then I will own 100 shares of AMC for $2.15 each. And that is how I can buy below the current market low 🧐.
This is a hedge fund favourite strategy."
Enjoy.
Not advice.
