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Today I’m recommending the following naked put write in Tenet Healthcare (NYSE:THC):
Sell to open the THC Mar. 16th $14 put at about $0.30.
A naked put write is a bullish position in which you expect the price of the underlying stock to increase.
Note: There are several March expirations available for THC options. Be sure you are opening the monthly options that expire on Friday, March 16, 2018.
THC shares are currently trading at $18.72, and the renewed bullishness in the market could potentially push the stock back up to its recent highs around $19.50. If the stock is trading above our $14 strike price at expiration, as I expect it will be, we will be able to keep all of the premium we received by selling to open this option.
If you do not want to be “put” the shares, watch for a drop below $13.60 prior to expiration on Mar. 16. If you are holding the option at expiration and the stock is trading below the $14 strike price, you will be put the shares. If you do not want to take possession of shares, exit the trade if THC shares drop below $13.60.
In percentage terms, THC at about $18.72 would have to drop more than 25% to trade under our strike price, so I think there’s a good chance that we’ll be able to walk away with the full premium at expiration.
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Ken Trester is editor of the popular Maximum Options program. Trester has been trading options since the first exchanges opened in 1973 with a winning streak that goes back to 1984 with money-doubling average annual profits since 1990.