Abstract: Describe the reasons of trading short put stock options of Xiaomi, and share the advantages and disadvantages of this strategy.
Transaction detail
Today I am sharing with you about the transaction I made on August 26, 2021, the detail is as follows:
Short put option
- Xiaomi Corp (HK stock code: 1810)
- Quantity: 1000 units of stock option
- Expiration: 2021-09-29
- Strike price: HK$22
- Stock price at transaction: HK$24.5
- Option price: HK$0.31
- Commission fee: HK$19
- Premium received: HK$291
Image source: http://www.aastocks.com/en/stocks/quote/detailchart.aspx?symbol=01810 021-08-26_zh
The reason why I did short put of Xiaomi
Yesterday (August 25) Xiaomi announced its interim results for the end of June this year. Revenue was RMB164.671 billion, up 59.5% year-on-year; net profit was RMB16.061 billion, up 141.1% year-on-year, both higher than expected. Earnings per share for the period was RMB 0.642, and no dividend was paid. In the second quarter alone, the group’s total revenue reached RMB 87.8 billion, an increase of 64% year-on-year, and the profit during the period reached RMB 8.3 billion, an increase of 83.9% year-on-year; adjusted net profit reached RMB 6.3 billion, an increase of 87.4% year-on-year. Both total revenue and adjusted net profit hit a record high in a single quarter. Xiaomi’s R&D expenditure in the second quarter was RMB 3.1 billion, an increase of 56.5% year-on-year. It can be said that Xiaomi’s performance is very satisfactory, and there is a trend of acceleration.
In addition, Xiaomi also repurchased 8.15 million shares today, with the repurchase price ranging from HK$24.2 to 24.45, involving total fund of HK$198 million. A total of 23.4 million shares of the company have been repurchased this year, accounting for approximately 0.0933% of the issued share capital.
I have said before that there are many Xiaomi home appliances in my home, which have been used for several years. It can be said that they are very cost-effective and very satisfying. So I am very confident in Xiaomi’s long-term development. The last time I increased my holdings of Xiaomi with HK$23.4 on August 20, please refer to this article for details. After seeing the announcement of Xiaomi’s results this morning, Xiaomi’s share price opened higher and then fell sharply, so I decided to open the short put option with strike price at HK$22, hoping to wait patiently for the low price to buy in more again. The return on option premiums is only 1.4%, which is considered low, but I don’t care too much because the point is to wait for buying low.
Comments and sharing
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