Education
Option Traders Collect Max Premium in $BKNG
Collecting premium is a term used by option traders that utilize option strategies that profit from the passage of time and selling of options. Selling of options doesn’t have to be “naked” then can be as spreads. In our Time Bandit Option Trading service we focus on Iron Condors that simultaneously sell a call spread […]
Collecting premium is a term used by option traders that utilize option strategies that profit from the passage of time and selling of options. Selling of options doesn’t have to be “naked” then can be as spreads. In our Time Bandit Option Trading service we focus on Iron Condors that simultaneously sell a call spread and a put spread at the same time in the same expiration. This type of trade wants the stock to stay within a specific range for a specific time period. As long as the stock closes in between the short call and short put then the option trader will collect max premium or 100% of the profit.
A good example of this is one that the Time Bandit service subscribers closed this past Friday in Booking ($BKNG). In our webinar on Thursday June 7th we analyzed the 2050-2197.5 Iron Condor option strategy. This means subscribers bought protective 2040 puts and 2207.5 calls and sold 2050 puts and 2197.5 calls. This took a total credit of $1.50. Since each option controls 100 shares of stock this coverts to collecting $150 per spread. This analysis was done with the stock at $2,133.05.
As you can see from the chart below the stock closed at $2,414.45 expiration on June 15th. This allowed subscribers to keep the full 100% of the $150 credit per option spread they put on.
