July 26th, 2023
One Stock, 20 Wins
Options Income Weekly members closed out just one trade last week, but it marked our 20th winner in a row on one of our favorite income generators: Roku (ROKU).
We began trading the TV streaming platform operator back in late 2019 and have gone back to it time and again due to its attractive premiums. In fact, we’ve traded it successfully nine times already this year.
Here’s a look at our ROKU trades from 2023:
So far this year, we’ve generated $312 in cash from ROKU with just one contract sold. Meanwhile, our average trade has returned 0.6% and our average holding time is less than five days.
We entered our latest trade on July 13. After closing out two winners that day in the first hour of trading, we wanted to help Options Income Weekly members put some cash to work.
While the market was rallying that day, ROKU shares were flat, presenting an opportunity to sell a short-term put that was more than 8% out of the money.
With the stock trading at $76.27, we sold the ROKU 21 Jul 70 Put for $0.60, or $60 per contract. At the time, we told members we would look to exit the trade at $0.30, or 50% of the max profit.
By July 18, the premium had fallen below our target exit price to $0.29, and we recommended booking profits. We exited the trade with $31 per contract in cash, earning a 0.4% return on our $7,000 ($70 strike x 100 shares per contract) in capital in five days.
Roku is scheduled to announce earnings on Thursday after the close. It has exceeded EPS estimates in two of the past three quarters, missing expectations only slightly in the previous quarter. But even a large beat isn’t enough to guarantee the stock will move higher, especially with a number of big-name tech companies reporting and the Federal Reserve meeting this week.
However, we may look to enter another trade after we see how the market reacts to the company’s results, taking advantage of still-elevated volatility levels.
Managing Editor, Traders ReserveT
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