Here's a cash-secured put setup on $AVGO that illustrates how to use elevated vol after an earnings selloff.
The stock sits ~26% off highs after the market punished last quarter's print. Revenue +86%, AI revenue +221%, but the guide came in slightly light, so shares got hit. That drawdown is the setup. Implied vol is still ~37% three weeks later—you sell premium when it's rich.
The trade: sell the $330 put expiring Oct 16 for ~$425. That's a 9.5% cushion below current price, 0.17 delta, 36 days out. Next earnings hit Dec 10, after expiration, so you're not holding through the event.
Plan before entry: buy the put back at $2.15 once it loses half its value, pocket ~$210. If $AVGO drifts toward $330 and the thesis holds, roll down and out for another credit. If assigned, your cost basis is $325.75—10.6% below today's price—and you start selling covered calls.
Return: 1.3% on capital in 36 days, ~13% annualized.
Only do this if you'd genuinely want to own $AVGO at $325.75. This is a conviction setup, not a vol trade for the sake of it.
The stock sits ~26% off highs after the market punished last quarter's print. Revenue +86%, AI revenue +221%, but the guide came in slightly light, so shares got hit. That drawdown is the setup. Implied vol is still ~37% three weeks later—you sell premium when it's rich.
The trade: sell the $330 put expiring Oct 16 for ~$425. That's a 9.5% cushion below current price, 0.17 delta, 36 days out. Next earnings hit Dec 10, after expiration, so you're not holding through the event.
Plan before entry: buy the put back at $2.15 once it loses half its value, pocket ~$210. If $AVGO drifts toward $330 and the thesis holds, roll down and out for another credit. If assigned, your cost basis is $325.75—10.6% below today's price—and you start selling covered calls.
Return: 1.3% on capital in 36 days, ~13% annualized.
Only do this if you'd genuinely want to own $AVGO at $325.75. This is a conviction setup, not a vol trade for the sake of it.
