FRSH Covered Call

October 30, 2023
Sell Existing Stock Position: Sell Your FRSH Stock for $17.5 (Approximately)

The market is higher today after a nasty stretch of declines. And while it’s possible we are due for a bigger bounce, when deciding whether we should hold our FRSHstock and sell a new call, the premiums in the November and December expiration cycles were not large enough to make it worthwhile. For that reason, ahead of earnings tomorrow, I am going to sell my FRSH stock and walk away from this trade with a loss.

To execute this trade you need to:

Sell your FRSH Stock

Please note, for all we know FRSH will rebound higher on earnings tomorrow afternoon, which would make this sale a mistake. And if you want to take the shot that the stock will move higher, you could:

Sell to Open the November 20 call for $0.40 (approximately)

Or

Sell to Open the December 20 call for $0.65 (approximately)

I am not going to sell a new call, and instead am going to exit my stock position so that I can raise cash for better opportunities.

September 8, 2023
Covered Call/Buy-Write: Buy Freshworks (FRSH) Stock and Sell the October 22.5 Call (exp. 10/20) for a net price of $21.60 or less.

As I highlighted earlier this week, Freshworks (FRSH) popped on my radar following several days of bullish option activity. That call buying was likely a play on the company’s Investor Day, which was well received by Wall Street (more on that below).

Today let’s get involved with FRSH by selling a defensive covered call, which will replace our IONQ covered call that should, though no guarantee, expire for its full profit next week.

To execute this trade you need to:
Buy FRSH Stock
Sell to Open the October 22.5 Call

For example, you could buy the stock for 23, and Sell the October 22.5 call for $1.40 (these prices are approximate, and I would expect you will get a better fill).

For every 100 shares of FRSH stock you buy, you can sell 1 call. For every 200 shares you buy, you can sell 2 calls. And so on …

The most you can lose on this trade is $2,160 per covered call should FRSH stock go to zero.

The most you can make on this trade is $90 per covered call should FRSH stock close above 22.5 on October expiration, or a yield of 4.16%.

Much like IONQ which I referenced above, FRSH stock is going to move around with growth stocks. So there will be some bumps in the road.

That being said, I like the risk/reward in this trade as the company Investor Day has passed, and earnings aren’t expected until the November expiration cycle.

Finally, here are some of the price targets for FRSH stock following the company Investor Day:

Credit Suisse – 23
JPMorgan – 25
Baird – 28
Oppenheimer – 26
Barclays -- 25