Hello Investors,
We made a few changes to the portfolio today.
First, we bought another 60 shares of DELL. That gives us complete coverage for our existing 45.00 strike covered call. If you are “delta hedging” then continuing with a smaller position size makes perfect sense. In addition, we are attempting to sell a 50.00 strike covered call for 0.30 credit (that call is unfilled and will be a GTC good til canceled order).
We made a swap and sold some shares of GM and bought XLY in its place. That was a form of taking on less risk with the uncertainty. We believe that GM can weather this storm and that the stimulus packages are big in bridging the gap. So, we are swapping back. However, we are doing it in a very conservative manner.
We took profit on our 20 shares of XLY.
We entered into a 1×2 put spread in GM for a credit of +1.03.
Bought 1 contract GM April 17th put at 19.00 strike
Sold 2 contracts GM April 17th put at 18.00 strike
Limit Credit: 1.03
Potential cost basis for reentry at April 17th expiration = 15.97
If the stock remains higher then we will make the +1.03 credit and reevaluate.
Have a great weekend!