Originally Posted by
mispoken
For my 45 DTE trades, I use almost exclusively naked puts and put spreads. (Also consider the $20 naked put, worst case scenario you are assigned 100 shares at a cost basis close to $15, if you have been wanting shares of this stock that’s a good option).
For earnings trades where I am trying to profit from the post earnings “volatility crush” I use iron condors, typically. Depending on how a stock moves after an earnings release I usually write another put spread or buy calls.
For my highest conviction companies, I dabble with buying deep in the money calls dated at least a year out. These move almost identically stock but require less capital (this is “stock replacement”).
For the statistical side of this, the RMO trade I posted is 66% P50, which are great odds. Realize though, you have to trade these often for the statistics to play out. This one might be a dud, but over time if you keep trading these ~70% trades, you should do well. Tastyworks makes it super easy.
Ok, all the SPAC stocks for the most part go out with warrants. They cost pennies and are exercised at, typically, 11.50. They are then sold into the market to keep the company for exercising them for the same pennies they were bought at. This stock will find support at 11.50 ish after all the warrants have been exercised and either held or sold for profit. If you are going to mess with RMO you may get lower prices. The range will be 11.50 to 18.00 as the stock typically has to be at or above 18 for the warrants to be convertible.
Long story short the big drop is the warrant holders paying the company 11.50 for the shares then dumping them on the market at the highest price possible. One of Buffet's biggest plays through the years. Pay a few pennies for a warrant and sell the stock for a few thousand percent gain in a few months.
Current warrant price:
RMO.WT Stock Price | Romeo Power Inc. Wt Stock Quote (U.S.: NYSE) | MarketWatch