Author: Bryan Halliday

A few updates as we have arrived at September monthly options expiration. SPY Trade Update: We have a bear call spread on in SPY. Importantly, we do NOT need to do anything with this trade. We are short the 545 calls and long the 550 calls. Regardless of whether you are still in the spread or if part of your spread was assigned early as it was for us (detailed below). For us, the 545 calls were exercised early last night. Leaving us with a short -100 shares of SPY and still long the 550 calls. This amounts to the exact same risk/reward as if the 545 calls had not been exercised early. There is nothing required with this trade. Our 550 calls are ITM and will automatically exercise this weekend buying 100 shares of stock which will close the short stock position. The result is a max loss because the stock finished above both strikes at expiration. APA Trade Update: The APA 27.50 strike put is ITM and we will assign us 100 shares of stock over the weekend. We do NOT need to do anything with this position and will receive the stock as planned. If you are not willing to own the stock, then “buy to close” the short put. This has worked out well for us as our cost basis overall is below current prices. X Trade Update: We exited our stock position and replaced it with a 1×2 put spread last month. That has worked out well as it will allow us to buy back into the stock for better prices. The 1×2 put spread will assign us 100 shares this weekend as planned. If you do NOT want the shares, one would need to “buy to close” 1 of the short 40 strike puts and let the rest of the spread go through a same day substitution over the weekend. SNAP Trade Update: We have a call butterfly spread in SNAP that will expire OTM and needs to adjustment. We ended up buying shares of the stock through a 1×2 put spread and that position is working well. Covered Call Trade Update: We have covered calls in the following stocks that will expire OTM and need no adjustments. CCJ – 55 and 60 strike calls INTC – 24 and 38 strike calls Basically no adjustments are required with any of our position as long as one is willing to own the stocks through our short puts as planned. Have a great weekend!

We have arrived at Fed (FOMC meeting) day. The Fed will embark on interest rate cuts for the first time in multiple years. While a cut is coming today, there are very likely to be more cuts to follow. Historically, that is not a great thing for stocks but we will stay open to any possibilities. Our September VIX trades hit expiration this morning. The settlement value came in at 18.69 which is a great price for us! We own the 16-19 bull call spread. So, we were only 0.31 away from a max profit. We get a credit (cash settlement) of 2.69 per spread paid back to us. We paid a debit of 0.59 to enter the trade. The result is a profit of +2.10 or +$210.00 per spread. That is a +356.00% return! Nothing is required, the VIX settles in cash tonight.

Hello Investors, We have been patiently waiting for more opportunities to add to our long-term investments. We have added to two (2) of them today. This takes our current available cash level down to $1,535 so we will likely hold off for a while and let the cash build up before adding more investments for a few weeks. The details are as follows: Bought 50 more shares of OXY at 50.55 Bought 20 more shares of NUE at 134.95 In addition to these purchases. We have bought a 1×2 call spread against our OXY shares. This is 1×2 is a “covered” position because we own 100 shares of the stock after today’s purchase. Buy to open: OXY Nov 15th (monthly) 52.50 strike call (ratio of 1) Sell to open: OXY Nov 15th (monthly) 57.50 strike call (ratio of 2) Debit: 0.77 Max risk = 0.77 or $77.00 per spread Max reward = 4.23 or $423.00 per spread If the stock rebounds, this essentially adds more upside to our current stock position.

We have decided to take profits on our VIX call butterfly spreads. We will leave the 16-19 bull call spreads toward expiration. There is likely to be a move up or down in the VIX before expiration. Either direction would take us away from our ideal zone. The details are below. Sell to close:  VIX Sep 18th (monthly) 16.00 strike call (ratio of 1) Buy to close: VIX Sep 18th (monthly) 20.00 strike call (ratio of 2) Sell to close:  VIX Sep 18th (monthly) 24.00 strike call (ratio of 1) Credit:  1.20 Profit of $0.83 per spread, a +224% return.

A week or so ago we attempted to buy a short-term put butterfly in SPY. It was the SPY Sep 6th (weekly) 560-550-540 put butterfly. We did NOT hit our entry price and thus are not in the trade. If an execution was achieved then this would be a place to look to exit the position. We did get filled on our MSTR put butterfly. That has a bit of profit but we will continue to hold. Our VIX positions we are likely to hold to expiration. The risk/reward in spreads is very favorable. However, the only way to get max profit is to hold to expiration. If/when we trade long calls instead of spreads, we would look to exit early. With spreads, we tend to be far more patient.

We have a short put on Apache (APA) and are adjusting the trade into a spread. This will reduce risk if the shares continue to fall as expected in the near term. Buy to open: APA Sep 20th (monthly) 30.00 strike put Debit: 1.78 – order has executed In addition, we have sold another covered call against our 100 shares owned of INTC. Now, we already have a short call but it is WAY OTM all the way up at the 38.00 strike. We could buy it back or even buy a lower strike call to hedge it. But we feel confident it will expire away in a couple of weeks on its own. Selling this covered call today allows us to double dip on the income. Sell to open: INTC Sep 20th (monthly) 24.00 strike call Credit: 0.27 – order has executed Lastly, we have purchased a speculative trade in MicroStrategy (MSTR). This could also be seen as a bearish trade on Crypto given their ownership of bitcoin. The details are as follows: Buy to open: MSTR Oct 18th (monthly) 120.00 strike put (ratio of 1) Sell to open: MSTR Oct 18th (monthly) 105.00 strike put (ratio of 2) Buy to open: MSTR Oct 18th (monthly) 90.00 strike put (ratio of 1) Debit: 2.10 – this is still a pending order (if not filled today then cancel) Max risk = 2.10 or $210.00 per spread Max reward = 12.90 or $1,290.00 per spread

We have removed the beta weighted hedge on the portfolio. It has moved against us a bit and we think it best to risk less in the position. Sell to close:  SPY Oct 18th (monthly) 552.00 strike put Buy to close: SPY Oct 18th (monthly) 529.00 strike put Credit:  4.11 Loss of $1.39 per spread