Author: Bryan Halliday

A couple of weeks ago we paid up for some SPY insurance. We spent $2,000 on that insurance which is more than we have spent for insurance since this program began a few years ago. It could’ve helped us in the event of a market downturn. Instead, the markets have pushed even higher. Actually the net effect is a positive in that most of our stocks have gone up by more in value than we have lost in the insurance. However, the stock portfolio gain is only a good thing if the stocks stay up from here long-term or we sell to lock-in those gains. We always want to increase our asset column. It is a personal goal that I have to increase my assets column each and every month. However, there are times when it probably makes sense to reduce your stock holdings for a short period of time. Move that money to cash/bonds or something less volatile and then increase the stock holdings later. The timing of such moves is VERY difficult. So we basically wait for a situation like this where we feel that we simply need to act. We think it makes sense to reduce our holdings and move some money to cash. We aren’t dumping massively but instead we are going to trim a few places. Our timing in the short-term may end up being terrible. We may very soon start selling OTM puts to buy some stuff cheaper but will try to be a bit patient in doing so. If anyone owns stocks in margin, then this is a great place to at least consider reducing. We own all of our stuff in cash, meaning that we have not spent more to buy that our account holds in cash. We are always sad when we reduce our stock asset column but here we go: We are going to let 100 shares of our DELL be “called away” over the weekend. We will continue to hold 100 shares going forward. That has been a grand slam overall. We had purchased another 100 shares of DIS in the midst of some chaos regarding the company and the return of Bob Iger. That was bought at 85/share. That worked out well overall! Sold 100 shares of our Disney DIS stock at 111.25 today and bought back 1 of the covered calls. Buy to close: DIS April 19th (monthly) 115.00 strike call Debit: 2.35 We will continue to hold the other 100 shares. We sold the remainder of our Dicks Sporting Goods (DKS) stock today. Sold 10 shares at 182.10 We had bought this when the stock was really beaten down following an earnings miss. We added a 1×2 call spread against 100 of our SNOW shares. The March 8th covered call expires this weekend for a full profit. Buy to open: SNOW April 19th (monthly) 175.00 strike call (ratio of 1) Sell to open: SNOW April 19th (monthly) 185.00 strike call (ratio of 2) Credit: 1.55 We collect a +1.55 credit. The risk is being “called away” from our stock at a 196.55 value. If the stock were to explode even higher than that amount, we miss out on some upside.

We have taken profits on our call butterfly in GLD. We entered for 3.84 debit and exited today for 8.40 credit. The result is a profit of +4.56 or +$456.00 per spread. That is a +119.0% ROI. Sell to close: GLD April 19th (monthly) 190.00 strike call (ratio of 1) Buy to close: GLD April 19th (monthly) 210.00 strike call (ratio of 2) Sell to close: GLD April 19th (monthly) 230.00 strike call (ratio of 1) Credit: 8.40 In addition, we are taking a short-term stock trade in SPY. We have shorted 30 shares with a tight stop-loss. Sold Short 30 shares of SPY at 509.64 Buy to cover stop loss above at 514.61 Good til canceled (GTC) order on the stop loss!

We discussed the breakout happening in the Gold markets. However, the mining companies have not been participating in the same manner. Operationally, they have been terrible companies. The earnings, revenues have been in declines across the space. We are likely hitting a bit of a low point for the fundamentals in these companies but that is far from a guarantee of real progress. We are adding to our positions but very small with 1.5k and 1k additions only.
Bought 100 shares of GOLD at 15.25
Bought 30 shares of NEM at 32.29

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

We rolled one of our SNOW covered calls yesterday and added a call butterfly. Probably the right decision given our positions. However, we never could have predicted the CEO stepping down. This is clearly a negative as Slootman is very well respected and has been a big part of the Snowflake story. Our March 1st cc will expire this weekend. We have sold another today to replace that option. This does leave us “naked” for 2-days but the March 1st cc is way OTM. Sold to open: SNOW March 8th (weekly) 205.00 strike call Credit: 1.80 – this order has filled In addition, we have rolled-up one of our Berkshire (BRKB) covered calls today as follows: Buy to close: BRKB March 15th (monthly) 410.00 strike call Sell to open: BRKB March 15th (monthly) 420.00 strike call Debit: 3.90 – this order has filled

Snowflake (SNOW) reports earnings tonight after the close. We have “rolled-up and in” on one of our SNOW covered calls as follows: Buy to close: SNOW March 15th (monthly) 220.00 strike call Sell to open: SNOW March 1st (weekly) 250.00 strike call Debit: 14.30 – order has been filled This is an expensive roll-up, but gives us some breathing room on one of our two (2) covered calls. We have entered into a far OTM call butterfly in SNOW. This is a very low cost and very small hedge against a big upside move. The spread is low probability of success but could slightly soften the cost of having to “buy back” an ITM covered call. Buy to open: SNOW March 15th (monthly) 250.00 strike call (ratio of 1) Sell to open: SNOW March 15th (monthly) 270.00 strike call (ratio of 2) Buy to open: SNOW March 15th (monthly) 290.00 strike call (ratio of 1) Debit: 2.10 – order has been filled Max risk = 2.10 or $210.00 per spread Max reward = 17.90 or $1,790.00 per spread

We have arrived at February monthly options expiration. We have a few trades that need to be monitored and possibly traded by the close today. This will likely be our last newsletter today. However, we will detail how we are managing each of the positions below: We have “bought back” our covered call in DKS and sold 10 of our shares. Sold 10 shares of DKS at 169.53 this locks in a profit of +$577.30 Buy to close: DKS Feb 16th (monthly) 170.00 strike call Debit: 0.55 The following have been executed this morning: We have “rolled out and up” on our DIS covered call as follows: Buy to close: DIS Feb 16th (monthly) 110.00 strike call Sell to open: DIS Apr 19th (monthly) 125.00 strike call Debit: 1.20 The following are probable adjustment we will need to make before the close today: Probable Adjustment #1 – We want to exit our OXY 1×2 call spread. However, we will place this order in the last hour of the trading session. And collect as much credit as is possible at that time. The larger the credit the better! Sell to close: Feb 16th (monthly) 59.00 strike call Buy to close: Feb 16th (monthly) 61.00 strike call Credit: as much as possible (placing this order in the last hour of the trading session between 3:00 pm ET – 4:00 pm ET) Probable Adjustment #2 – We have a variety of positions in DKNG. We own a 43-48-53 call butterfly. However, we also have a short 45 strike covered call. All with a February expiration. Here is the game plan to be executed with about 10-15 minutes before the close (execute at 3:45 pm ET). If the stock is below 43/share – nothing is required all calls expire If the stock is between 43-45 per share, “sell to close” the 43.00 strike call, the rest of the calls will expire If the stock is above 45/share but below 48/share, do nothing (no adjustments needed) as the long 43 call will offset the short 45 call. If the stock is above 48/share (not likely), then “buy to close” both of the 48 strike calls and do nothing else. The following are probable adjustments we will need to make before the close today: Possible Adjustment #1 – We have a covered call in DELL – Feb 85.00 strike call. If the stock at the end of the day is well below 85/share, we will simply let the call option expire. If the stock is at or above 85/share, we will place an order to “buy to close” the short 85.00 strike call. Possible Adjustment #2 - We have a call butterfly in SNOW – Feb 235/250/265. If the stock at the end of the day is well below 235/share, we will simply let the call options expire. If the stock surges up at any point today, we will “sell to close” the February 235 strike call, the other calls will expire worthless. Looking to get 1.00+ in premium for the 235 strike call. We have the following short calls thaw will expire for a max gain, no adjustments required. CVS Feb 80 strike call CVS Feb 85 strike call NEM Feb 45 strike call OXY Feb 67.50 strike call We have the following short puts that will expire for a max gain, no adjustments required. Z Feb 45 strike put DKNG 34 strike put OXY 56 & 54 strike puts

We have rolled-up and out on our GM covered call as follows: Buy to close: GM Feb 16th (monthly) 38.00 strike call Sell to open:  GM April 19th (monthly) 43.00 strike call Debit: 0.60 – order has filled We have rolled-up and out on 1 of our SNOW covered call as follows: Buy to close: SNOW Mar 15th (monthly) 200.00 strike call Sell to open:  SNOW April 19th (monthly) 220.00 strike call Debit: 9.85 – order has filled We have rolled-up and out on 1 of our DIS covered call as follows: Buy to close: DIS Feb 16th (monthly) 105.00 strike call Sell to open:  DIS April 19th (monthly) 115.00 strike call Debit: 3.58 – order has filled