A Calculated Naked Call on YINN – My Latest Strategy

It’s been a few days since my last post, and today, I seized an opportunity I felt confident about. I executed a naked call option on YINN, selling 24 contracts at the $70 strike price with an expiration date of November 15, 2024. The total premium I collected from this trade was $3,000 USD.

Originally, my target was to sell at the $65 strike price, which would have brought in around $3,840 USD. However, due to unfavorable spreads at that level, I shifted to $70 strike price for better execution. This decision gave me a smooth fill at $1.25 per contract, ensuring I locked in the premium.

Why I Chose This Strategy
Currently, YINN trades around $39-$40. After evaluating the market sentiment and the potential impact of upcoming stimulus news from China, I don't see a realistic scenario where YINN climbs beyond $70 within a month.

Even with positive catalysts, the stock is unlikely to surpass its previous high of $60—the level I monitored during my last call trade. Based on my analysis, the probability of the stock reaching $70 in the next 30 days is slim to none. The probability of profit (POP) for this trade stands at 94%, as seen in the attached screenshot.

To put things into perspective: for YINN to move from $40 to $70, it would require a 75% increase in just one month. Given current market conditions, this kind of surge is extremely unlikely, even if favorable news surfaces.

Why a Naked Call Felt Safe Here
Although this is a naked call strategy without a vertical spread to hedge, I believe the risk is minimal. The $65 and $70 strike prices are far from the current trading range, making them secure levels to short. The naked structure allows me to maximize my premium collection without additional complexity.

If YINN stays below $70 by November 15, I keep the entire $3,000 premium. If it goes above that, I may need to manage the position accordingly, but as things stand, I’m comfortable with this setup.

Conclusion
This trade reflects my evolving approach to managing options. The goal is to capitalize on market sentiment shifts while maintaining reasonable risks. I’ll reassess my strategy as we approach the expiration date, sharing updates on how I adapt based on market movements.

Let’s see how this one plays out by November 15. If the trade works out as planned, it will be a great example of how careful analysis and patience can pay off.

If you found this post helpful, please give it a like and follow me for more insights into my trading journey. I look forward to sharing more strategies and trades with you all!