On March 27 YUM Stock plunged after announcing changes to their China KFC division. Those changes included menu updates and a revamping of a number of key aspects of the China KFC restaurant chain. I had expected investors would react favorable but instead they sold off shares, plunging the stock down to support at $72.50. For a few minutes the stock fell through support before quickly recovering. The rest of the day the stock tried to recover. On Friday the stock shot back up recovering more ground from the previous day’s collapse.
These are often money making opportunities which if you follow specific stocks, are quick to spot and quickly acted upon. At the same time though, they can leave naked put positions deep in the money and at risk of assignment. I often take advantage of these types of plunges to roll positions for even more profits. This strategy article looks at a fairly simply but highly effective method for rolling options that are in the money to keep them profitable and away from possible assignment as long as possible.
Combining that strategy with others can vastly improve the profit potential of the trade itself. This article discusses the additional trades used in YUM Stock on March 27 to explain my methods for staying invested, reducing capital at risk and adding more profits to the overall trade.
Rolling In The Money Options Strategy
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