Hello Investors,
We are making a couple of adjustments to the portfolio.
We sold a covered call against our 100 shares of BRKB shares.
Sell to open: BRKB Aug 21st (monthly) 207.50 strike calls
Limit: 0.55 credit
We also added a 1×2 put spread to DELL. This is a mini hedge of sorts. The stock has extended higher in price. This will protect some of the gain in the stock if it pulls back toward 57/share at expiration. However, it does require us to buy 100 shares more of the stock if it falls sharply lower (we plan to simply exit the spread and not buy more shares). That sharp move lower seems unlikely at this point but is always a possibility. We see this as advantageous for a few reasons. If the stock goes higher then we make a little money back (0.45 credit). If it pulls back in price, then the 1×2 put spread goes up in value. In addition, the ITM covered calls would come back for us as well. So, we have a big advantage to the stock going down. We make a little bit if it goes higher or sideways from here to Aug 21st expiration.
Buy to open: DELL Aug 21st (monthly) 62.50 strike puts (ratio of 1)
Sell to open: DELL Aug 21st (monthly) 60.00 strike puts (ratio of 2)
Limit credit: 0.45
This is ideal for someone willing to own 100 shares more shares at 57.05 cost basis and would benefit from their ITM covered calls coming back down. We plan to exit this spread at expiration and not buy more shares. However, that is always a possibility with “naked” puts.
Have a great week!