STMP Options Play

Trade idea: STMP

The put contract at the $165 Jan 15 strike price has a mid point of $1110. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $165 but will also collect the premium, putting the cost basis of the shares at $153.90 (before broker commissions). To an investor already interested in purchasing shares of STMP would represent an attractive alternative to paying $183 share today. Should the contract expire worthless, the premium would represent a return 7.2% or 54% annualized on the cash commitment.

Why we like this trade:
We feel STMP has strong support around 173. It is also in oversold territory according to RSI and the MACD is about to crossover.   If the stock trades flat or trends up we will be profitable and our break even point is 15% below the current stock price giving us some downside protection.

STMP trade idea