If you’re getting ready to trade U.S. stocks around earnings, there’s a detail about the stock options Binance just launched that matters more than “collecting premium”: the money hits your account first, but so does the obligation to fulfill the contract.
In an announcement on October 15, Binance introduced two strategies: selling call options against shares you own—you must sell the shares at the agreed price if you’re assigned; and selling put options backed by enough cash—you must buy the shares at the agreed price if you’re assigned, even if the market price is lower.
Both strategies lock up the corresponding shares or cash. The premium can only offset some of your losses if the stock falls. Selling calls against shares you own also limits how much you can gain if the stock rises.
My take: the value of this feature is that it turns the price at which you’re willing to sell or buy shares into a contract. If you want to keep the freedom to hold on when the stock surges, or to walk away from buying when it falls, that premium isn’t interest you get for free.
#StockEarningsSeason
In an announcement on October 15, Binance introduced two strategies: selling call options against shares you own—you must sell the shares at the agreed price if you’re assigned; and selling put options backed by enough cash—you must buy the shares at the agreed price if you’re assigned, even if the market price is lower.
Both strategies lock up the corresponding shares or cash. The premium can only offset some of your losses if the stock falls. Selling calls against shares you own also limits how much you can gain if the stock rises.
My take: the value of this feature is that it turns the price at which you’re willing to sell or buy shares into a contract. If you want to keep the freedom to hold on when the stock surges, or to walk away from buying when it falls, that premium isn’t interest you get for free.
#StockEarningsSeason