MARA is being taken to the woodshed with many other momentum stocks today. This is a crypto proxy play, so this plus RIOT and SOS and MVIS are all getting taken out.
With this move, investor fears are (justifiably) elevated, and implied are still running hot at around 200%. I think that this is a fade.
The technicals still look "fine." Odds are the stock won't see a gap fill to 40 anytime soon, and will just chop investors up to death.
Which is good--- that's what we want, we want to see bounces and selloffs and chop, all while our trade setup decays and we pull out a nice profit.
The Setup
Pretty straightforward idea here, we are selling puts that have a nice cushion to the downside and offer some solid risk premium. I think today's nasty selloff may see a few more days of downside, so it's possible I'm early on this trade.
That's why I want to scale in-- I will add to this trade if MARA comes into the gap from Feb 5th-- that's in the mid 22's, and I'll look for just a bit more of an overshoot to the downside to add.
If things get nasty, then I can always roll the put sales down and out to April options.
If you want to keep your margin requirements down, then look at buying the 15 put against, making the trade a March 18/15 bull put spread.
