Author: Bryan Halliday

We are making a few changes to our OXY position. We closed the current covered call but we did it through buying a lower strike call. The reason this is better is that although unlikely, since we had to pay 0.02 to close our 55 strike call. We would rather pay 0.02 to buy the 52.50 call to “cover” it and leave us with the potential to make some money on a big spike higher (very unlikely to happen). Next, we added both a 1×2 call spread (June) and 1×2 put spread (May) to OXY. Berkshire owns a lot of OXY and it is their annual meeting this weekend. We are using the 1×2 put spread to potentially buy more of OXY stock now that it has reached our levels. Ultimately Berkshire may end buying up the entire OXY company but that probably wouldn’t be for a few years.

Buy to open:  OXY May 19th (monthly) 52.50 strike call
Debit: 0.02
This essentially closes (buys back) the current covered call in May at the 55 strike but gives us a sliver of hope for more profit.

This 1×2 call spread is not “naked” because we own 100 shares of the stock
Buy to open: OXY June 20th (monthly) 42.50 strike call (ratio of 1)
Sell to open: OXY June 20th (monthly) 47.50 strike call (ratio of 2)
Debit: 0.70
Max risk = 0.70 or $70.00 per spread
Max reward = 4.30 or $430.00 per spread

This 1×2 put spread is ONLY if you are willing to own 100 shares of the stock
Buy to open: OXY May 16th (monthly) 39.00 strike put (ratio of 1)
Sell to open: OXY May 16th (monthly) 36.00 strike put (ratio of 2)
Debit: 0.31
Likely risk = 0.31 or $31.00 per spread
Max reward = 2.69 or $269.00 per spread
Max risk = Being “put” 100 shares of stock at a cost basis of 33.31

We are making a few more changes to the portfolio today. We will be getting a little bit more “risk off”. We think the odds of a recession has moved up to well over 90% probability. That isn’t the end of the world for markets/stocks long-term. But it would likely reduce the stock markets value if/when it is happening. Could we avoid one? Of course the answer is yes. However, although anything is possible, not everything is probable. We will stick with the side of probability. Sold 50 of our EQT shares and bought back 1 of the covered calls Sold EQT 50 shares at 50.10 Buy to close: EQT June 20th (monthly) 60.00 strike call Debit: 0.32 Sold the remainder of our U.S. Steel (X) position and close the covered calls Sold X 100 shares at 44.10 Buy to close: X May 16th (monthly) 47.00 strike call Debit: 1.10

We are moving to a beta weighted neutral portfolio. This is very aggressive but feel that it makes sense in this market environment. If the markets fall lower, our puts in SPY will offset some of the risk in our portfolio. If the markets scream higher, the gains in the portfolio will be offset by losses in the SPY puts. We think it makes sense to move to a neutral stance and let the dust settle for a bit of time. To figure out your beta weight in TOS, you simply click the beta weight button and type in SPY. Then look down at the delta column at the bottom. If you have TWS (IB), then pull up the risk navigator and look at the delta of SPX, then SPY is 1/10th of that amount. Buy to open: SPY August 15th (monthly) 578.00 strike put Debit:  41.60 – this order has filled Max risk = 41.60 or $4,160.00 This position will move by at least $1,000 in value over the coming days, very high risk/reward hedge.

We are closing our SLV put butterfly for a small loss. The exhaustion has happened in precious metals (see GLD chart) but the reversal isn’t really playing out in SLV. Sell to close:  SLV July 18th (monthly) 29.00 strike put (ratio of 1) Buy to close: SLV July 18th (monthly) 25.00 strike put (ratio of 2) Sell to close:  SLV July 18th (monthly) 21.00 strike put (ratio of 1) Credit:  0.69 Loss of -0.28 or $28.00 per spread

We feel that the market is in a bearish correction (ABC correction). We reduced an existing stock position by selling 100 of our 200 shares of U.S. Steel (X) and bought back a covered call. We would like to get this money back working on another asset when the timing is right, likely through a 1×2 put spread strategy. Here are the trade exit details:

Sold 100 shares of X at 43.31
Bought to close: X May 16^th (monthly) 47.00 strike call
Debit: 1.23

We have closed our GME put butterfly for basically breakeven. We got some things right about volatility (why we can still breakeven). However, the price of the stock has not cooperated and gone down toward our ideal zone. Sell to close:  GME Oct 17th (monthly) 20.00 strike put (ratio of 1) Buy to close: GME Oct 17th (monthly) 15.00 strike put (ratio of 2) Sell to close:  GME Oct 17th (monthly) 10.00 strike put (ratio of 1) Credit:  0.85 – this order has filled We entered at 0.88 debit, so the loss is -0.03 or -$3.00 per spread (roughly breakeven). In addition, we have entered into an adjustment in PYPL. Since we already have a short put that is making money, this will work in union with the current short 55 strike put to create a 1×2 put spread. Essentially it reduces our reward if the stock stays above 60/share. But it increases our reward and improves our cost basis in the stock if the shares fall below 60/share by May 16th expiration. Buy to open: PYPL May 16th (monthly) 60.00 strike put (ratio of 1) Sell to open: PYPL May 16th (monthly) 55.00 strike put (ratio of 1) Debit: 1.03 – this order has filled We will enter into a very short-term speculative put spread in QQQ. A couple of weeks ago we sold a bear call spread that profited +$64.00. We suggested that we would use that money to attempt to compound further. This is trade #2 in the series. Buy to open: QQQ May 5th (weekly) 455.00 strike put (ratio of 1) Sell to open: QQQ May 5th (weekly) 453.00 strike put (ratio of 1) Debit: 0.64 – this order has NOT been filled It is a day order only. If we can get filled great. If it doesn’t hit our price, then we will cancel the idea.

Having passed April monthly options expiration. We have replaced some covered calls today as follows: Sell to open: CCJ June 20th (monthly) 50.00 strike call Credit: 0.75 Sell to open: EQT June 20th (monthly) 60.00 strike call Credit: 0.65 Sell to open: NUE June 20th (monthly) 135.00 strike call Credit: 1.07 Sell to open: SNAP June 20th (monthly) 11.00 strike calls Credit: 0.21

We have entered into a put butterfly in Silver (SLV). The precious metals have been on a nice run and we suspect the trend is a little exhausted in the short-term.

Buy to open:  SLV July 18th (monthly) 29.00 strike put (ratio of 1)
Sell to open:  SLV July 18th (monthly) 25.00 strike put (ratio of 2)
Buy to open:  SLV July 18th (monthly) 21.00 strike put (ratio of 1)
Debit: 0.97
Max risk = 0.97 or $97.00 per spread
Max reward = 3.03 or $303.00 per spread

We are bought back at a profit 2 of our 3 bear call spreads in XLE. We anticipate a bit of a market correction is setting up. That should give us an opportunity to reinitiate some hedges and strategy. Buy to close: XLE May 16th (monthly) 85.00 strike call Sell to close:  XLE May 16th (monthly) 88.00 strike call Debit: 0.52 Profit of $0.18 per spread We are in a great spot to allow our QQQ bear call spread to expire worthless for a profit. If we get a correction, we may use the $64.00 of profit to purchase a short-term put spread. We will see if we can turn a small risk into a larger sum of capital with a couple of trades. As long as QQQ is settling below 465/share we can simply let the April 11th weekly calls expire for a max profit of the credit received.