To The Moon

$Trump Media & Technology Group(DJT)$ stock is back in sight as Trump's inauguration date approached, whose shares were up about 21% on Monday while slid 8% in the following session.

The Truth Social operator's shares, which sometimes move on traders' viewpoints regarding Trump's political fortunes, have more or less treaded water since early December. Now, with Trump set to be inaugurated for a second time next Monday, those traders may once again be looking to buy ahead of a big event. 

The upward move in "DJT" shares is the latest in a wild recent run for the stock. In the pre-election fall, the shares dropped below $12, weighed down by fears that Trump and other insiders might dump their shares once they became eligible to do so. Since then, though, they rose nearly $55 before Election Day; they're currently changing hands on $40.

Here are some general options strategies that you might consider that can be tailored to your market outlook, risk tolerance, and investment objectives:

1. Bull Call Spread

Buy a lower strike call and sell a higher strike call.

• Profit: Limited to the difference between strike prices minus the net premium paid.

• Risk: Limited to the net premium paid.

• Example: Buy a $40 call and sell a $45 call, reducing your upfront cost compared to a long call.

  $DJT Vertical 250124 40.0C/45.0C$

2. Cash-Secured Put (Sell Put)

• What It Is: You sell a put option with the intention of either collecting the premium or being assigned shares at the strike price.

• When to Use: You are bullish to neutral and comfortable buying the stock at a lower price.

• Example:

  • Sell a $35 put option. $DJT 20250124 35.0 PUT$

  • Outcome:

    • If the stock stays above $35, you keep the premium.

    • If the stock falls below $35, you’re obligated to buy 100 shares at $35 each.

  • Risk: If the stock drops significantly, your effective cost is the strike price minus the premium received, but you'll incur a paper loss on the shares if the price drops further.

3. Put Credit Spread (Bullish Spread Strategy)

• What It Is: You sell a higher strike put and buy a lower strike put to limit risk.

• When to Use: You are moderately bullish and want a lower-risk, income-generating strategy.

• Example:

  • Sell a $40 put and buy a $35 put (same expiration). $DJT Vertical 250124 35.0P/40.0P$

  • Outcome:

    • If the stock stays above $40, you keep the net premium.

    • If the stock drops below $35, your loss is limited to the difference between strikes minus the premium.

  • Risk: Limited to the spread width minus the net premium received.

  • Reward: Limited to the net premium.

  Source: Tiger Trade App

4. Synthetic Long Stock (Bullish Strategy)

• What It Is: Combine selling a put with buying a call at the same strike price to mimic a long stock position.

• When to Use: You are very bullish and want leverage without owning the stock outright.

• Example:

  • Sell a $40 put and buy a $40 call. $DJT Custom 250124 40.0C/40.0P$

  • Outcome:

    • If the stock rises, the call provides unlimited upside.

    • If the stock drops, losses mirror owning 100 shares.

  • Risk: Significant if the stock drops below the strike price.

  Source: Tiger Trade App

Key Considerations for Selling Puts:

1. Capital Requirement: For cash-secured puts, ensure you have enough cash in your account to buy 100 shares per contract if assigned.

2. Strike Selection:

   • Choose a strike price below $40 (e.g., $35 or $30) to increase the probability of keeping the premium.

   • Higher strike prices yield more premium but increase the likelihood of assignment.

3. Expiration Date:

   • Short-term options (e.g., 30 days) decay faster, offering quicker returns but require active management.

   • Longer-term options provide more premium but take longer to expire.

4. Volatility Impact: Higher implied volatility (IV) inflates option premiums, making put-selling more attractive.