Short Term Income Trade on Tech

The Nasdaq and S&P are on a 4-day gain streak and the market seems to have settled down from some of the recent headlines around Fed tapering, uncertainty in the Middle East, and rising Covid cases amid the FDA's approval of the Pfizer Covid-19 vaccine.  While the market was digesting these headlines, tech stocks ripped higher with many companies setting new all time highs.  

ZScaler is one of those companies and the stock hit an all time high today at just over $257/share.  They are expected to report earnings on Sept 9th, and the street is expecting positive results compared to estimates.  The options are paying great premiums right now, and to take advantage of the recent spike in volatility, we are selling the September $220 Puts for $3.15.  If the stock drops below $216.85 we would buy the shares at that net price, otherwise we keep the relatively rich premium on these Puts which expire in 24 days.  There's a 84% probability that the share price stays above $220 at expiration, which we believe will be the outcome at expiration.