An Option Trade To Get SoFi Stock At A Discount

Core Viewpoint - SoFi Technologies (SOFI) is a highly-rated stock with significant implied volatility, making it attractive for options trading strategies like cash-secured puts [1][7]. Group 1: Cash-Secured Put Strategy - A cash-secured put involves writing a put option while setting aside enough cash to buy the stock, aiming to either let the put expire worthless or acquire the stock at a lower price [2]. - Selling a November 21, 25-strike put on SoFi generated approximately $218 in premium, obligating the seller to purchase 100 shares at $25 if assigned [3]. - The break-even price for this trade is calculated at $22.82, which is 12.3% below the current price of $26.02 [4]. Group 2: Reward vs. Risk - If SoFi's stock remains above $25 at expiry, the put option expires worthless, yielding a 9.6% return on capital at risk, equating to around 66% on an annualized basis [5]. - The maximum loss occurs if SoFi's stock falls to $0, resulting in a loss of $2,282, although most traders would likely exit the position before reaching this point [6]. - Cash-secured puts are viewed as a way to generate high returns on stocks that investors are willing to own, potentially allowing for additional income through covered calls if assigned [6]. Group 3: Stock Ratings and Earnings - SoFi Technologies holds a Composite Rating of 99 out of a possible 99, with an Earnings Per Share Rating of 80 and a Relative Strength Rating of 97, ranking first in its group according to Investor's Business Daily [7]. - The company is expected to announce Q3 earnings in late October, introducing earnings risk associated with the trade [7].