COIN Trade

Coinbase Global Inc. (COIN)

Update 2/22/2023: I exited my short bull put vertical spread on COIN, one day before expiration, for a $0.92 debit per contract/share, a profit before fees of $29 per contract. Shares were trading at $59.07, down $3.71 from the entry level.

The Implied Volatility Rank at exit was 39.7%, down 19.2 points from the entry level.

I exited on the day after entry because the position reached 24% of maximum potential profit, just below my normal exit point for earnings plays, 25%.

Shares fell by 5.9% over one day for a -2,157% annual rate. The options position produced a 31.5% return for a +11,505% annual rate.


I have entered a short bear call vertical spread on COIN, using options that trade for the last time 24 days hence, on March 17. The premium is a $1.21 credit per contract share and the stock at the time of entry was priced at $62.78.

The Implied Volatility Ratio stood at 58.9%.

Premium:$1.21Expire OTM
COIN-bear call spreadStrikeOddsDelta
Calls
Long66.0062.0%51
Break-even64.21
Short63.0057.0%56

The premium is 80.7% of the width of the position’s short/long spread. The profit zone covers a 2.3% move to the upside and an unlimited move to the downside.

The risk/reward ratio is 1.5:1, with maximum risk of $179 and maximum reward of $121 per contract.

How I chose the trade. The trade was placed to coincide with COIN’s earnings announcement, after the closing bell on the day of entry. The short strikes were set to coincide with the expected move of $10.93 either way, based on options pricing, which gives a price range of $52.94 to $72.62.

By Tim Bovee, Portland, Oregon, February 21, 2023

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

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