Rocket Mortgage Parent Primed For This Kind Of Option Trade

Core Viewpoint - Rocket Companies, known for Rocket Mortgage, is gaining attention as its stock was added to Investor's Business Daily's SwingTrader portfolio, indicating a potential investment opportunity for traders with a neutral to slightly bullish outlook [1] Group 1: Cash-Secured Put Strategy - A cash-secured put involves writing a put option while setting aside cash to buy the stock, aiming to either keep the premium if the option expires worthless or acquire the stock at a lower price [2] - Selling a March 20 put option with a strike price of $20 generated approximately $236 in premium, obligating the seller to purchase 100 shares at that price if assigned [3] - The break-even price for this trade is calculated at $17.64, which is 12% below the current trading price of around $20.07, offering a potential return of 13.4% on capital at risk if the stock remains above $20 at expiry [4] Group 2: Risk and Return Analysis - The maximum loss on the trade would occur if Rocket stock fell to zero, resulting in a loss of $1,764, although most traders typically cut losses before reaching this point [5] - Cash-secured puts can generate high returns for investors willing to own the stock, allowing for additional income generation through covered calls once the stock is acquired [6] Group 3: Ratings and Industry Position - Rocket stock has a Composite Rating of 78 out of a possible 99, with an Earnings Per Share Rating of 15 and a Relative Strength Rating of 90, ranking sixth in the Finance-Mortgage & Related Services industry group [7]