Option Trade on CROX

The chart on Crocs, Inc (NASDAQ: CROX) coupled with the juicy premiums make it worth consideration for writing naked puts. The implied volatility is at 47 for the June 65 strike and at 45.6 for the June 70 puts. Both of those options are currently out-of-the-money and based on the chart should be worthless by June expiration. I see the potential for CROX to come down to around 67+-, but it SHOULD find support and move back up before June expiration.

Just yesterday I said I was going to try not to trade much until I found some July options to sell, but this is today and I hate to miss a good opportunity. To keep myself a little honest, I’m going to set my limit a little higher than usual and will go farther OTM. The June 65 put should be fairly safe to sell. If CROX does break support, it could go as low as 60 and I’d still be sitting at break even if I could write an at-the-money covered call. With their recent profit spike I think the downside is fairly limited. The PEG is under 1.0 and forward p/e is just over 19.

Schaeffer’s Research had a good article last week on CROX, so I won’t go into more detail here when you can just read it there.

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