[Teddi Knight]

Teddi, this article says that KO goes ex-div on June 4th. The actual ex-div date is June 11th.

https://www.dividend.com/dividend-stocks/consumer-goods/beverages-soft-drinks/ko-coca-cola-co/

Tom

[Teddi Knight]

Yes I sold the $65 in the money naked puts but it was for a quick trade as I believe the stock will bounce and then drift sideways. I also sold the $62.50 put strike. I hope this helps. I will try to write-up an outlook.

[Teddi Knight]

ok, thinks for the plan. Sort of what I was planning too:)

Amy

[Teddi Knight]

I never open a position in a stock that I don’t want to own. Using that as a guideline, here is one of the rescue strategies that I would use.

By my technical indicators GMCR was trading along just fine until Mar 23rd. It had “softened” for several weeks prior to that and it would have been okay to write puts. But when the 23rd came that became a confirmed downtrend and I would have stopped trading puts at that point.

That brings us to where your position is now. Looking at your position size, the rescue strategy I would use at this point is to write 1 near term call. You are well below your purchase basis and can no longer write near term calls for any profit. So at this point (May 31) I would write 1 Jun 88 Call for approx 1.66 When you get confirmation of the trade, enter a buy order with what is called a “stop on quote” at 87.80. The assumption here is that this stock is going to continue its decline.

Whenever I enter a position I always look at all possible outcomes. This position I consider a sub-position. If the stock stays the same you keep the $166 and re-write the position. If the stock goes down you keep the $166 and re-write the position at a lower strike. If the stock goes down a lot you can roll the position down within the same month and not only make more profit, you will have a lower purchase basis if it moves back up within the month. If the stock goes up, but not above 87.80, you keep the $166 and re-write the position at a higher strike. If the stock shoots up past 87.80 your stop is then activated and you own a covered call at 88.00 with a cost basis of 86.14 (minus commission). The worst case scenario here is that the stock jumps up far enough to trigger your stop and then drops back down. But in my book that’s okay. This was a stock I was not afraid to own to begin with and I have now lowered my purchase basis. And I start the process again.
I have employed this rescue strategy time and time again. Sometimes I will have two of these running at the same time on the same original position. It’s a great way to generate income on a stock position you were never afraid to own more of to begin with.

These are simply my own thoughts and have nothing to do with this website or Teddi. And by the way, I think this is one of the best websites out there for the individual investor. I just wanted to offer my possible help to your position, which we’ve all been in.

[Teddi Knight]

Teddi,

Did you see the drop in BMY and do a trade? Or any suggestions for one? I STO BMY STRIKE $62 for June @ .85. Seemed to be a Friday afternoon over reaction, no?

Amy

Amy

[Teddi Knight]

I entered into a credit put spread 65/60 early morning and got hammered. Ouch. Did not realize that there was news coming.

[Teddi Knight]

Yup! Oh well, not my first incident being “timing disadvantaged”, and probably not my last! WMT isn’t setting my heart on fire, either…

[Teddi Knight]

Any update as to where you stand on this trade relative to the use of a stop loss?

Thanks

Tom

[Teddi Knight]

Well, we should have waited a day, huh?

[Teddi Knight]

Teddi says in her articles to not go by the brokerage firm’s calculation of the margin power. She keeps track of the margin separately. In your example of 10 contracts for a 10$ stock would result in cash requirement of $10,000. Calculating 50% margin usage, you would want to consider $5,000 being used for this trade. The remaining available balance in the account would be 100K-5K = 95K for other trades.

[Teddi Knight]

Teddi,

On May 14, you made a suggestion of selling June calls on XBI with a strike of $240. Since we are pretty close to that number, would you suggest adding to the position to average in which I have often successfully done, or roll, or sit tight for a few more weeks?

Amy

[Teddi Knight]

I’m in. Same trade, same premium. Thanks, Teddi and Amy!

[Teddi Knight]

Teddi, are you using a stop loss on these trades?

Tom

[Teddi Knight]

@Kikib – congrats on your first trade. My favourite part is where you say time for you to take charge after excess fees etc. Definitely the first step forward.

[Teddi Knight]

thanks very much Tom.

All The Best!
mike

[Teddi Knight]

Absolutely. The options can be exercised at any time prior to the expiration date.

Tom

[Teddi Knight]

STO MRK Jun 19 57.5 @ 0.48

[Teddi Knight]

Thanks for education! I’m a newbie as well.

I dipped my toe in with LINE $12 Strike 19 Jun. It has been floating under $12 for a week or two now. It is a stock I am willing to hold long term.

My question is: if the buyer decides to, can (s)he put the shares before 19 Jun?

Thanks for your knowledge.

mike

[Teddi Knight]

Thank you for the reply. That is helpful.

[Teddi Knight]

BTC KORS PUTS MAY STRIKE $60.50 @ .10

lousy trade idea, and I don’t want GPS to mess with the price tomorrow, leaving me holding the stock into earnings. I think it may be washed out, but I am not a gambler with KORS.

Amy

[Teddi Knight]

Up nicely this AM. If I can get out of my $80 puts I will, but I think I will need to wait at least another week or so. No one trusts a GMCR rally:) BUT it’s a start!

Amy

[Teddi Knight]

Good questions many of would ask if we thought about them. Thanks for beginning the conversation!

[Teddi Knight]

Rescues take time, for sure. It took me almost 2 years on AGQ, and I wasn’t selling calls because I just kept rolling. I got lucky being in a close month (June) when silver finally made it’s move.

You have to decide if staying with the trade is worth more than the value of using the money elsewhere. There have been times when I said “eff it” and took the loss and moved on. It’s a personal decision for us all.

Teddi could probably have helped me a lot on AGQ, but I really never asked:) I just felt so stupid!

Amy

[Teddi Knight]

At 2pm Eastern, this trade was ~ 0.92 Bid 0.98 Ask with high for the day @ $1.18. I thought why not try for what Amy got. It went through!
STO LOW June $67.50 @ 1.00. I did see a $1.02 go though right after mine.

Thanks all

[Teddi Knight]

I don’t know if this will help you much, but I posted a while ago on AOL about a possible reversal day in GMCR. It got a downgrade this AM, dropped, and then on volume seems to have turned positive. Might be bottoming here FWIW.
Amy
Amy

[Author]

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