Alan answers a question posed by Greg, who asks:
TSLA will be added to the S&P on 12/18. Presumably, there will be a lot of rebalance-related buying toward the end of next week. There should also be increased volatility in the stock. Normally, I would not buy that stock because of various fundamental factors. In this instance, however, I am
thinking of selling one-week puts about 50 points OTM.
I realize that there is a potentially unlimited risk, however, I think the upside substantially outweighs the downside risk. Also, the options should yield a hefty premium. I am prepared to assume the risk.
It’s the 2nd Wednesday of the month. Time for another original episode of Ask Alan. AA#186, Using Delta and Implied Volatility to Assess a High Risk Trade Become a premium member today, and tune in to the educational power of the complete library!
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