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In a rising market naked puts are fine if you plan to own the shares should the stock fall and you are assigned.
Credit put spreads provide a stronger level of protection and free up more capital for investing. Overall I would recommend credit put spreads over naked puts but it comes down to your final goal.
I never hold positions over earnings unless I am willing to own shares. I have no idea as to the quantity of positions you have but if this was my trade and I did not ever want shares I would be using the higher volatility ahead of earnings to roll out and lower and placing a stop-loss.
Everyone has a different outlook. I am not sure why you are in at $170 for this position but if I wanted to eventually own some shares then I would just keep rolling. If I did not ever want shares I would have used a stop-loss and got out of the trade prior.
Hope this helps.
I leave the tax situation to my accountant but he advises that both US and Canada have a tax treaty with many nations to avoid double taxation. Netherlands appears to be one of them but always check with your tax specialist first.
With markets rising ARM reached $98 today before closing at $93.11. You may find it back above $100 shortly. Just never know when it comes to these high volatility tech stocks.
I added in comments regarding ARM stock in the morning Investing Strategy Notes today.
https://www.fullyinformed.com/members/morning-investing-strategy-notes-for-mon-apr-22-2024/Hope this helps. Any further questions please post them!
I would roll out. I will take a look at premiums later today. If you bought long puts I would be selling those to bring in more profits before April 26 while they still have premiums. It really depends on what put strikes you bought to secure your credit put spreads. The plunges in many tech stocks has become so deep that normally we should expect rebounds or bounces that are tradable. ARM, I believe, will be around for years to come.
Sorry to have missed this before expiry but as explained, my plan was always to roll-down. I think $140 to may be $120 would be a bottom is any major sell-off or one day plunge in the correction. The stock is down deep already. Each move lower becomes more attractive. I never like a loss which is why I prefer to roll-down and keep bringing in more profits. All my AMD trades for Apr 19 and Apr 26 expiry periods have been updated.
It depends on your outlook. I don’t think we are going to enter a large correction until May, June or the summer. However if you do not like to roll a position down, then you want to:
a) watch for a point where the trade can be closed and part of the short put side profits taken. Even earning 25 cents on each contract is still a decent profit. Then hold the long puts to see if the IWM ETF falls and perhaps profit from that as well.b) set a stop-loss of whatever loss you are willing to take whether double the profit or whatever you feel is reasonable.
Thanks for your reply; Not sure what you mean with more than 1 reverse iron condor. An iron condor means both side of the trade are covered.
The trade was setup with 10 debit spreads on the call side and 10 on the call side. This is typical of all my trades. Some are 5 debit spreads on each side but most are 10. If you not doing both sides of the trade then it is not a reverse iron condor. Both sides of the trade are setup prior to the earnings being released.
Then it is a matter of watching the stock after earnings to determine which side to hold and which side to close over the coming days to expiry. Stocks move around a lot and these types of trades do well when held for a period of time. You can see that in the Netflix trade.
If you are planning on setting up just one debit spread on the put side and one on the call side, I might suggest setting up two. I definitely suggest paper trading to learn the strategy and learn to maximize the profit. Hope this helps out.
The trade result is within the trade alert a little further down the page under the heading Outcome. Here is a link:
Normally I prefer naked puts on stocks I would own. Credit put spreads provide a lot of protection in stocks sitting at all-time highs like at present. Once there is a large sell-off I usually setup more naked puts. Credit put spreads also extend your available capital significantly. They allow an investor to trade in stocks like Netflix Stock (NFLX) or Meta Stock (META) for example. Otherwise the amount of capital needed to secure naked puts is very high for those stocks which often means missing out on some excellent trade opportunities.
I trade during the day before trying to time the moves in the stock. Here is an older but still valuable article on this strategy.
In this trade the call is so deep in-the-money that it is better to let the shares go in my opinion. If you want out early you can buy back the call and sell the shares at the same time to end the trade or wait for expiry.
If you want to try to trade the stock wait for a drop and then buy back the call and wait for the stock to rebound, then sell a call a lot higher up.
Another strategy is to just keep rolling the covered call forward. The $220 call for Sep 20 expiry is $304 to buy to close. The $230 call for January is $314.00. This moves you up $10 and earns $10.00 to roll up. Then in September, buy back the January $230 and roll out to March or April 2025 at $240. The trade is so deep in-the-money that you could get exercised at any time which would be fine as you are continuing to earn more income each time you roll. At the same time, if you can stay 6 months out, you have a good chance you can keep rolling. Depending on your outlook, this constant rolling can work you higher in the stock and being this deep in the stock provides a lot of protection against a major pullback. If the NASDAQ were to fall 30% or 40% in a bear market, META could fall by an equal amount.
One more idea for you. I like to take my profit from the original trade and then sell a put strike to get back into the stock at a price point I like. For example today (Thu Apr 4 2024) META is at $510. I like to go out months, perhaps Jan 2025 and sell the $390 put for $37.00 if you would own shares at $390. Or since you sold your $220 call, sell the $250 put strike which can earn $9.00. Personally I would sell the $330 put as I would own stock at that level. That put can be sold for $20.00. If you are worried the stock will fall well below your short put then buy a long put perhaps $100 or $150 below. Otherwise I prefer using a naked put and setup a stop-loss. Just remember when doing this strategy, pick a price point you would own shares at. That way, you won’t get shaken out as readily if the stock falls back.
If you think the stock will keep going higher, maybe consider selling the $400 put strike which can earn $40.00.
While this last method won’t make up for the rally leaving you behind due to your covered call, you can still bring in some decent returns.Hope this helps you with your decision-making process.
The key to this trade was as soon as the stock began trading it was obvious from the earnings that the stock was going to collapse. That meant I sold the long calls Jan 30 for $2.70. I kept the short calls until Feb 16 when I bought them back for 23 cents which locked in a nice profit on the short calls.
For the puts I sold them out in groups. On Jan 25 I sold some for $27.50 and on Feb 5 for $32.00.
The short puts though I held until Feb 9 and paid 70 cents to close those which locked in most of the profit from selling the short puts.You can see that the key is to break apart the trade after earnings. I’ll get around to posting this trade’s results but there are a lot of trades already posted along with comments on how to handle the trades. If you look below the trades as they are posted there is a section that says “Learning The Trade Ahead Of Earnings Strategy”. Here are three articles that explain more in detail:
I think the easiest way to give some answers to your questions is to update the Netflix trade. I will post the details this weekend for you.
You should begin to see the changes shortly. Developers are just making some changes to the website and how it handles data.
Two Apple Stock trades that were rolled from Feb are:
https://www.fullyinformed.com/members/apple-stock-aapl-million-dollar-challenge-trade-alerts-for-fri-feb-23-2024/
and
https://www.fullyinformed.com/members/apple-stock-aapl-million-dollar-challenge-trade-alerts-for-thu-feb-22-2024/They are worth reviewing to see how the rolls were done and the final profits which were excellent.
There have been no shares assigned in Apple. The stock has stayed above my put strikes. There are three trades outstanding still for April 19 expiry but they are at $157.50 put strike. The stock has not been that low in the recent selling and I anticipated it will not be.
If you review prior trades you can see the SPY option strikes used and how they relate to where the SPY ETF was trading on that particular day.
Thanks for the question. I always use strikes that are closest to where the SPY is trading and with the largest volumes.
Since the stock is so low, it could be a chance to average cost lower being aware that the dividend could be cut. The payout ratio is far too high for the company.
The drop has been quite a surprise. BCE is back at 10 year lows. There are a few issues I address in today’s morning Investing Strategy Notes along with a trade I plan to enter. At present prices I think the stock should eventually bounce but in investing there is never a guarantee which is why I like selling put options. Here is a link:
https://www.fullyinformed.com/members/morning-investing-strategy-notes-for-fri-mar-15-2024/
Hi Ray;
Another stock to stay clear of is COIN which is not conservative and volatile.
If you need help with any PANW trade please post the details with expiry dates and quantity of spreads being used. That will assist in replying with repair ideas.
I will pull this info out for you.
I do each side separately throughout the day. I wouldn’t place a trade in one move. Try reviewing some of the prior trades. You can see that I setup positions throughout the trading day.