Cash-Secured Puts Position Established in Crocs Inc. and Owens Corning

Two 100% Cash-Secured Puts positions were established this morning in Crocs Inc. (ticker symbol CROX) and Owens Corning (OC).  Both companies appeared on the Covered Calls Advisor's Value+Profitability+Growth stock screener.  They both have FY 2021 P/E ratios below 10 and also are currently projected by analysts to increase earnings again this fiscal year--about 20% for Crocs and 14% for Owens Corning.  

1. For Crocs Inc., two March 18th, 2022 $75.00 100% Cash-Secured Put options were sold at $2.50 when the stock price was $81.06.  Given the Covered Calls Advisor's current cautious Overall Market Meter outlook, a moderately out-of-the-money (i.e. strike price below the stock price) Cash-Secured Puts position was established.  The probability that the Puts will remain out-of-the-money on the options expiration date was 74.3% when this position was established.  If this occurs then the Puts will expire worthless and the maximum potential annualized return-on-investment shown below would be achieved.  In addition, the Implied Volatility of the Puts was very high at 69.8 despite the fact that the next quarterly earnings report is not until April 26th (which is after the March 18th options expiration date).

Some key numbers for this Crocs Inc. Cash-Secured Puts position are:
Cash-Secured Put Cost Basis: $14,501.34
Profit if Stock Price Above $75 Strike Price on March 18th, 2022 Expiration Date: $498.66
Days Until Expiration: 17
Absolute Return-on-Investment: +3.4%
Annualized Return-on-Investment: +73.8% 

 

2. For Owens Corning, two March 18th, 2022 $85.00 100% Cash-Secured Put options were sold at $1.80 when the stock price was $89.70.  The probability that the Puts will remain out-of-the-money on the options expiration date was 73.8% when this position was established.  If this occurs, then the maximum potential annualized return-on-investment of +46.3% would be achieved.  The Implied Volatility of the Puts was 46.1 when this position was established, well above VIX's 31.5 current value.  Establishing positions where the Implied Volatility is greater than that of the S&P 500 Index (i.e. VIX) is strongly preferred by the Covered Calls Advisor.  It is one of the twelve investing "edges" (see here) I utilize to achieve outperformance in comparison with the benchmark S&P 500 Index. 

Some key numbers for this Owens Corning Cash-Secured Puts position are:
Cash-Secured Put Cost Basis: $16,641.34
Profit if Stock Price Above $85 Strike Price on March 18th, 2022 Expiration Date: $358.66
Days Until Expiration: 17
Absolute Return-on-Investment: +2.2%
Annualized Return-on-Investment: +46.3%

Regards and Godspeed,
Jeff Partlow (The Covered Calls Advisor)
partlow@cox.net