12/31/2023 0 Comments Slack stock price graph![]() ![]() To generate enough income through selling a Put and to take advantage of a “known” timeframe going out to June, which has a decent number of options already traded, looks to be a good month to choose. Salesforce has also said that it expects the merger to close in its second fiscal quarter which runs from May to July, or three to five months from now. In Slack’s case due to the high likelihood the Salesforce acquisition will occur the premium, due to lower volatility of Slack’s stock, will be lower than normal. The volatility of a stock also comes into play. They are dependent on how close or far the strike price is from the current stock price and how soon or far the expiration date is from the day the option is bought or sold. There are different levels of risk and reward when selling options. Selling Slack Puts to generate income and return Something else to keep in mind is that the investor’s brokerage firm will probably want the investor to have enough cash to cover the trade if the Put option is exercised. The biggest downside for the Put seller is if the stock price craters and they have bought the stock at the strike price but it is worth substantially less. The seller of the Put can still make money if the cash they receive is more than what the option is worth when the expiration date comes along. ![]() The seller receives cash for selling the option.Īn investor who sells a Put is expecting the price of the stock to rise above the strike price and then the Put option is worthless. When an investor sells a Put it obligates them to purchase the stock at the strike price, if the buyer exercises the option. ![]()
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