09 June 2021 - Earning safely from Memes stocks

This is not a financial advise.

The recent madness in those memes stocks were simply irrational and out of hand. Tons of my FOMO colleagues were discussing how to buy AMC, BB, CLOV and WEN. I don't encourage people to chase after this FOMO but rather take the opportunity to ride it. I had made some money from several transaction by trading option of such stocks.

One example would be BB. 

It was trading at about 8 dollar level for the past months before the recent explosion to 15 dollar. Thus, I sold the Put Option at 12 dollar strike price for BB that expire at the end of the week. I got the premium of 2.35 USD per share and since option contract works on 100 shares, I got the premium of 235 USD upfront. 

Should BB closed above 12 dollar, I am safe. Should BB trades at 12 dollar or below, I am obliged to either buy 100 shares of BB at 12 dollar per share or to buy back the Put Option contract (likely to cost above 2.35 USD depending on price of BB). 

By doing this, I do not need to chase the price of 15 dollar but rather have the chance to buy BB at 12 dollar. If the volatile continue, I could simply choose to perform a covered call for BB at any price above 12 dollar. 

On the other hand, if BB decide to keep going up, then I would simply shift the strike price up weekly till the end of the party. 

Cheers to the profits ^.^

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