Dell Technologies Inc. (DELL)

Update 3/6/2023: I exited my short bull put vertical spread on DELL, 46 days before expiration, for a $1.21 debit per contract/share, a loss before fees of $24 per contract. Shares were trading at $40.15, up $0.79 from the entry level.

The Implied Volatility Rank at exit was 11.3%, down 40-.1 points from the entry level.

I exited on the day after entry because the price move opposite the direction of the trade.

Shares rose by 2.0% over four days for a +183% annual rate. The options position produced a 19.8% loss for a -1,810% annual rate.

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I have entered a short bear call vertical spread on DELL, using options that trade for the last time 50 days hence, on April 27. The premium is a $0.97 credit per contract share and the stock at the time of entry was priced at $39.36.

The Implied Volatility Ratio stood at 51.4%.

Premium:	$0.97	Expire OTM
DELL-bear call spread	Strike	Odds	Delta
Calls
Long	42.50	73.0%	31
Break-even	40.97	65.5%	39.5
Short	40.00	58.0%	48

The premium is 77.6% of the width of the position’s short/long spread. The profit zone covers a 4.1% move to the upside and an unlimited move to the upside.

The risk/reward ratio is 1.6:1, with maximum risk of $153 and maximum reward of $97 per contract.

How I chose the trade. The trade was placed to coincide with DELL’s earnings announcement, after the closing bell on the day of entry. The short strikes were set to coincide with the expected move of $1.52 either way, based on options pricing, which gives a price range of $37.84 to $40.88. The Zacks Investment Research earnings surprise predictor gave DELL a score of -4.35%, with a rank of 3(hold).

By Tim Bovee, Portland, Oregon, March 2, 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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