Trade Alert 3/1/2024

We are still planning to launch our new program. The idea being to sell SPX covered calls rather than cc’s on individual stocks. We are having a brutal time with individual cc’s of late as stocks like DELL explode higher. Today we have sold a put which will serve to hedge our trade against being “called away” in two weeks time at March 15th expiration. This adjustment is good if the stock is at or above 105/share on March 15th. If the stock comes way below 105/share, then we would have been better off just staying in our existing position. Sell to open: DELL March 15th (monthly) 105.00 strike put Credit: 0.80 – this order has filled This is a “naked” put. However, it is sort of hedging our being “called away” in the DELL covered call. If the stock finishes above 105/share, this put expires for a profit of +0.80 or $80.00 If the stock finishes below 105/share, this put replaces our existing covered call. Meaning we are “called away” at the 80.00 strike covered call but “put” back in the stock at 105/share. We also have an April covered call that is currently deep ITM on DELL. We have added the following 1×2 put spread in DELL to “hedge” against that stock being “called away” in April. The details as follows: Buy to open: DELL April 19th (monthly) 110.00 strike put (ratio of 1) Sell to open: DELL April 19th (monthly) 100.00 strike put (ratio of 2) Debit: 0.75 – this is still a pending order and has not filled Probable risk = 0.75 or $75.00 per spread Max risk = owing 100 shares at a 90.25 cost basis (this would probably serve to offset our April cc stock being called away) Max reward = 9.25 or $925.00 per spread