BREAKING: Supreme Court Hears Trump Tariff Arguments Bitcoin play Strategy (MSTR) closed near its low of the day in Tuesday's market drop, and the stock is below its 21-day, 50-day and 200-day moving averages. Also, Strategy's relative strength line has declined since mid-July, and the stock is showing signs of heavy selling pressure. With the price of bitcoin dropping below $100,000, Strategy stock could remain under pressure for some time. Last month, we looked at a bear call spread on Strategy that can b ...

Core Insights - Retail investors are increasingly attracted to leveraged ETFs for enhanced returns when engaging in options strategies like covered calls and cash-secured puts [1][12] - Leveraged ETFs, such as ProShares UltraPro QQQ (TQQQ), aim to amplify the returns of an underlying index, typically by 2x or 3x [3][9] - The article highlights the significant differences in performance and risk between leveraged ETFs and traditional ETFs like Invesco QQQ Trust (QQQ) [6][10] Summary by Category Definition and Functionality - ETFs are securities that track an index or a basket of assets and trade like stocks, providing diversification similar to index funds [2] - Leveraged ETFs utilize financial derivatives to magnify returns, with TQQQ targeting 3x the daily performance of the Nasdaq 100 [3] Performance Comparison - TQQQ exhibits much greater price fluctuations compared to QQQ, leading to higher potential returns and risks [6][10] - Initial calculations show that TQQQ has an expected return of 5.86% over 32 days, annualized to 66.87%, while QQQ has a return of 2.09%, annualized to 23.86% [10][11] Implied Volatility - The implied volatility of TQQQ is significantly higher, at 51%, compared to QQQ's 17%, which aligns with the expected higher returns from leveraged ETFs [9] Investment Strategy Considerations - Leveraged ETFs may be suitable for investors seeking higher returns and willing to accept increased risk, but they may not be appropriate for those focused on capital preservation [12] - The article suggests that most retail investors should avoid leveraged ETFs when implementing low-risk strategies, although they may be applicable for higher-risk investors [12]

Hedge funds worldwide look to be favoring the dollar in the option market as they bet that the currency’s rebound versus most major peers will extend into year-end. Funds in Europe and Asia have ramped up option trades this week based on the view that currencies such as the euro and yen will weaken against the dollar, according to traders. Bearish option trades on the euro versus the dollar expiring by December saw three times more trading volumes than bullish ones on Wednesday, data from the Chicago Mer ...

Group 1 - The core concept of selling cash secured puts is to generate extra income by writing put options while setting aside enough cash to purchase the stock if assigned [1][2][3] - Cash secured puts are considered a bullish strategy, but less bullish than outright stock ownership, suitable for investors who expect the stock to remain flat or rise slightly [2][3] - Investors selling cash secured puts should be prepared to take ownership of the stock if the put option is exercised, contrasting with naked put sellers who do not intend to own the stock [3] Group 2 - The closer the strike price of the put option is to the current stock price, the higher the premium generated and the likelihood of assignment [4] - An example involving Sofi Technologies (SOFI) illustrates that with the stock trading at $27.55, a put option with a strike price of $26 could yield a premium of $206, obligating the seller to buy 100 shares at that price [5] - If SOFI trades above $26 by the expiration date, the put option expires worthless, allowing the seller to keep the premium, resulting in a net cost basis of $23.94 if assigned, which is a 13.10% discount from the initial trading price [6]

Core Insights - Oscar Health (OSCR) is characterized by high volatility, leading to elevated option premiums, making cash-secured puts an attractive strategy for traders looking to buy the stock at a discount [1][6]. Cash-Secured Put Strategy - A cash-secured put involves writing a put option while setting aside enough cash to purchase the stock if assigned [1]. - For example, selling an October 17 put with a strike price of $17 could generate approximately $110 in premium, obligating the seller to buy 100 shares at that price if assigned [3]. Financial Metrics and Returns - The break-even price for this trade is calculated at $15.90, which is 10.5% below the stock's recent close [4]. - If the stock remains above $17 at expiration, the put expires worthless, yielding a 6.92% return on capital at risk, equating to around 84% on an annualized basis [4]. Risk Considerations - The maximum loss occurs if Oscar Health stock falls to zero, resulting in a loss of $1,590, although investors typically would exit before reaching this point [5]. - The risk profile of cash-secured puts is similar to outright stock ownership, with potential losses offset by the premium received [4]. Earnings and Ratings - Oscar Health has already reported its second-quarter earnings, eliminating earnings risk for this trade [6]. - Investor's Business Daily assigns Oscar Health a Composite Rating of 50 out of 99, with an Earnings Per Share Rating of 27 and a Relative Strength Rating of 73, ranking 43rd in its group [7].

Company Overview - NextEra Energy (NEE) stock has recently shown bearish trends, breaking down through its 200-day moving average, indicating potential challenges ahead [1] - The company is a leading U.S. utility holding firm, primarily operating through subsidiaries like Florida Power & Light and NextEra Energy Resources, and is a major producer of wind and solar power [6][7] Investment Strategy - A bear call spread strategy is suggested for NextEra Energy, assuming the stock will struggle to exceed $72.50 by mid-October [1] - The bear call spread involves selling an out-of-the-money call and buying a further out-of-the-money call, which can be profitable if the stock trades lower, sideways, or slightly higher, as long as it remains below the short call at expiry [2] Financial Metrics - The potential return from the bear call spread with an October 17 expiration, using strike prices of $72.50 to $77.50, is approximately 26.6%, with a maximum gain of $105 and a maximum loss of $395 [3][4] - NextEra Energy holds a Composite Rating of 59 out of a best-possible 99, an Earnings Per Share Rating of 83, and a Relative Strength Rating of 19, ranking 16th in its group according to Investor's Business Daily [6] Environmental Goals - NextEra Energy aims to reduce carbon emissions by 67% from 2005 levels by the end of this year while expanding its portfolio of contracted clean energy projects [7]