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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.
Hi Ray;
For more conservative trades try Microsoft but trades in Palo Alto Networks (PANW) are momentum driven. PANW is like Super Micro and even NVIDIA Stock (NVDA). Stay clear of those if you have trouble with momentum type stocks.
I’m here to help if you need some. I am not sure what positions you are in as all my trades have worked out beautifully. You may be selling put options too close to where the stock is trading or perhaps going too far out. Maybe try following the trades I place or even going lower than what I have done. Try the Put Options Selling Tool Analysis for some guidance. Below are the three trades since earnings were released. The trade done ahead of earnings was exceptional as well.
https://www.fullyinformed.com/members/4th-watch-list-trade-alert-for-tue-feb-27-2024/
https://www.fullyinformed.com/members/3rd-trade-alert-and-idea-for-wed-feb-28-2024/
Thanks for the update. I had a couple other members email about this as well. I spotted the error before the open on Friday and fix it.
https://www.fullyinformed.com/members/6-watch-list-trade-ideas-for-fri-mar-1-2024/
Trade Idea 1:
For Mar 22 expiry selling the $305 put strike for $0.50 or more and buying the $255 put strike for $0.06 or less to form a credit put spread.
In the end here is the trade setup:
https://www.fullyinformed.com/members/5th-watch-list-trade-alert-for-fri-mar-1-2024/TRADE DETAILS:
Short Puts: Sold 5 put contracts for Mar 22 2024 expiry at the $305.00 put strike for $0.64 = $320.00Long Puts: Bought 5 put contracts for Mar 22 2024 expiry at the $245.00 put strike for an average of $0.05 = ($25.00)
Spread Details: This forms a $60.00 credit put spread returning 1.0% earning $295.00 if held to expiry on Mar 22 2024
Buy To Close Early Offer: I am offering $0.27 to start and will reduce that amount as the trade moves toward expiry on Mar 22 2024
Sorry to have missed this. Two trades were done.
This trade was setup just before earnings:
https://www.fullyinformed.com/members/goal-of-70-return-for-zscaler-stock-zs-trade-ahead-of-earnings-strategy-setup-for-thu-feb-29-2024/This trade was done after earnings when the stock collapsed
https://www.fullyinformed.com/members/zscaler-stock-zs-trade-alert-and-idea-for-fri-mar-1-2024/I will take a look at this and see what is on the website.
I keep the trades to a manageable size as often when I get over 30 contracts I find that prices can fluctuate fairly widely both when trying to buy 50 or more contracts and especially selling them out. With 15 to 30 contracts I have found it easy to swiftly enter and exit a trade, often for just a few minutes and still end up with a profit.
The other reason is for those times when a trade moves against my initial entry point. When I have 15 to 30 contracts, buying another 15 to 30 contracts when I entered too early makes it much easier to average the cost of my trade lower making the likelihood of a profit to the trade much higher.
Last is when a trade moves against me and I have no choice but to take a loss, 30 contracts is about all I want to take a loss on. 50 60 or more contracts really adds up quickly when a loss is being taken.
Hope that helps.
Thanks for your questions on this portfolio.
I will write-up a more detailed reply for you.
Teddi
Sorry to have missed this. The ETF closed out-of-the-money but you could have closed this trade on Jan 12 for 10 cents and avoided the chance of being assigned or having to roll the position forward. Here is the outcome of my trade in which I closed my trade on Jan 12. https://www.fullyinformed.com/members/40-goal-portfolio-iwm-etf-trade-alerts-for-tue-dec-26-2023/
Remember, once you have placed a trade, leave open an offer to buy to close throughout the entire trade and adjust it as the trade works its way to expiry but at 10 cents it is always worthwhile to buy back the short puts, end the trade and get the capital into another trade. This will often avoid drops in the ETF when least expected or wanted.
Thanks for your question.
Thanks for your questions.
I plan to roll any in-the-money puts forward into either the end of January or into Feb and down a few dollars. Eventually I expect the stock will bounce.
For my 300 shares I am still holding them and will wait for the stock to bottom and then buy 100 or 200 more to reduce the overall cost. I may sell some in-the-money covered calls on Wed Jan 17 2024 on these 300 shares.The next membership sale will be President’s Day. I suggest buying just a monthly membership and then when the sale comes up, do a renewal at that time which will extend the one month membership out to whatever length of time you pick.