Dollar General $DG - Cash Secured Put Trade Idea

25 nov 2023

On Wed Nov 22 2023 I entered a cash secured put trade on DG

I did this for several reasons:

Price closed above the 50MA on daily candles.
Price broke out of the horizontal support.
Price closed above a medium/long term diaginal support.
Moving averages are crossing over and sloping upwards.
Price is oversold as the stock has fallen by approximately -62% from its October 2022 high.
The stock volatility was at 94% giving th edge to option sellers, yet we are still 15 days away from DG earnings.
Earnings are another example why I think the price of my put will expire OTM and I will get to keep this inflated premium. You see the bar for DG earnings as set by the analysts is pretty low, with the estimates of EPS: $1.197 and Revenue: 9.648B, both I believe could be low targets for DG based on their historic and last quarter results.
There is also an unfilled bullish gap from a technical perspective above the current price at around the $138.44-$157.60 level.

I sold a DEC 15 $115 PUT for a premium of $2.95 per contract. My thoughts are that the contracts will expire worthless and that I will be able to keep the premium. If the volatility drops from the current levels I will realize my profits faster. Depending on how much profit gets captured from the option I might exit early before earnings and lock in profits without increasing my risk due to the upcoming earnings, as we know during earnings its a coin toss and anything can happen.



This is my first post idea on TradingView, hope this was helpful for the readers. If so, follow me for more ideas on stock and option trading.

Enjoy the weekend and good luck next week!