Author: Bryan Halliday

There is no question that sharp bull market trends are the most difficult for our approach. It puts covered calls to the test. It moves outside of normal standard deviations and not by just a little bit. Even some of the roll-up and roll-out type of option adjustments haven’t been enough overall. Important to keep the long-term perspective through any short-term move. But also we need to manage risks, so we will make a couple of adjustments today. We bought a very short-term call butterfly in SNOW. We have March covered calls so expiration is not right around the corner. But the price moves can become extreme in the short-term. So, we will hedge off some of the covered call risk by spending a little money on a bullish trade. Buy to open:  SNOW Feb 16th (monthly) 235.00 strike call (ratio of 1) Sell to open:  SNOW Feb 16th (monthly) 250.00 strike call (ratio of 2) Buy to open:  SNOW Feb 16th (monthly) 265.00 strike call (ratio of 1) Debit:  2.75 – order has filled Max risk = 2.75 or $275.00 per spread Max reward = 12.25 or $1,225.00 per spread We own 200 shares of OXY and only have 1 covered call. The company reports earnings next week. We have added a 1×2 call spread against the other 100 shares. Buy to open:  OXY Feb 16th (monthly) 59.00 strike call (ratio of 1) Sell to open:  OXY Feb 16th (monthly) 61.00 strike call (ratio of 2) Debit: 0.18 – order has filled We have two covered calls against 200 shares owned of Disney (DIS). We are rolling only 1 of them up. Buy to close:  DIS Feb 16th (monthly) 105.00 strike call Sell to open:  DIS Feb 16th (monthly) 110.00 strike call Debit: 2.95 – order has filled We have a February and March covered call against or DKNG shares. We are rolling up the Feb call as follows: Buy to close:  DKNG Feb 16th (monthly) 42.00 strike call Sell to open:  DKNG Feb 16th (monthly) 45.00 strike call Debit: 1.40 – order has filled

The FOMC meeting will be out today at 2:00 pm ET. Will the Fed suggest that rate cuts are coming soon? Expect some volatility as always around this event. Two adjustments on our BKR position. First, taking profits on the put spread. Second, rolling down and in on the covered call. Sell to close:  BKR March 15th (monthly) 31.00 strike put Buy to close: BKR March 15th (monthly) 29.00 strike put Credit: 1.40 Buy to close:  BKR April 19th (monthly) 36.00 strike call Sell to open: BKR Feb 16th (monthly) 30.00 strike call Credit: 0.20 We own a 95/105 1×2 call spread in Disney against our 200 shares of stock. We are taking profits on the lower strike long call. Leaving the short calls against the stock. Sell to close: Feb 16th (monthly) 95.00 strike call Credit: 4.60

We own 203 shares of BRK.B. We only have 1 covered call sold and have held off on the other as the stock is breaking out to the upside. Today, we think it makes sense to simply roll-up the first covered call and leave the remainder uncovered. Buy to close: BRKB Feb 16th (monthly) 380.00 strike call Sell to open: BRKB Feb 16th (monthly) 390.00 strike call Debit: 2.85 – still pending order In addition, we are looking to purchase a put spread hedge against our NEM stock. Buy to open: NEM Feb 16th (monthly) 35.00 strike put Sell to open: NEM Feb 16th (monthly) 32.50 strike put Debit: 0.73 – still pending order Max risk = 0.73 or $73.00 per spread Max reward = 1.77 or $177.00 per spread

We have purchased a couple of bearish positions against some of our stock positions (slight hedges). Bought a put butterfly in WBA as follows: Buy to open:  WBA March 15th (monthly) 22.50 strike put (ratio of 1) Sell to open:  WBA March 15th (monthly) 20.00 strike put (ratio of 2) Buy to open:  WBA March 15th (monthly) 17.50 strike put (ratio of 1) Debit: 0.60 Max risk = 0.60 or $60.00 per spread Max reward = 1.90 or $190.00 per spread Bought a put spread in BKR as follows: Buy to open:  BKR March 15th (monthly) 31.00 strike put Sell to open:  BKR March 15th (monthly) 29.00 strike put Debit: 0.67 Max risk = 0.67 or $67.00 per spread Max reward = 1.33 or $133.00 per spread

This is our 2nd newsletter today. We have two ITM covered calls in Z and DKNG that will be “called away” at 100 shares each. In both cases, we will continue to own 200 other shares. We are selling puts in both of those names to potentially get back in at lower prices. Sell to open:  DKNG Feb 16th (monthly) 34.00 strike put Credit:  1.10 – executed Sell to open:  Z Feb 16th (monthly) 45.00 strike put Credit:  0.51 – executed Selling some covered calls early because the January c.c’s are expiring away this weekend. Sell to open: SNOW Mar 15th (monthly) 220.00 strike call Credit: 4.00 – executed Sell to open: DIS Jan 26th (weekly) 96.00 strike call Credit: 0.25 – executed Sell to open: BAC April 19th (monthly) 36.00 strike call Credit: 0.27 – executed Sell to open: MTCH Mar 15th (monthly) 42.50 strike call Credit: 0.65 – still pending Sell to open: DKNG Mar 15th (monthly) 43.00 strike call Credit: 1.30 – still pending

We have taken profits on the BRKB long 360 strike calls. This was part of a 1×2 call spread and the rest of the trade will expire OTM. Sell to close:  BRKB Jan 19th (monthly) 360.00 strike call Credit:  3.10 Profit of $130.00 per spread All of the other January expiration trades are set to either expire or have been adjusted previously. Have a great weekend!

Draftkings (DKNG) gapped higher today. We own the 38/43 call spread as part of our original risk reversal. We have a pending order to sell the 38 strike call for a little bit of value and the 43 calls are set to expire OTM and should need no adjustments. Sell to close: DKNG Jan 19th (monthly) 38.00 strike call Credit: 0.43 – order has not filled yet We have already rolled 1 of our 2 covered calls in Z. Today we have rolled the other up and out. Buy to close: Z Jan 19th (monthly) 50.00 strike call Sell to open: Z Feb 16th (monthly) 52.50 strike call Credit: 0.55 – this order has filled We have already rolled 1 of our 2 covered calls in DELL. Today we have rolled the other up and out. Buy to close: DELL Jan 19th (monthly) 70.00 strike call Sell to open: DELL Feb 16th (monthly) 75.00 strike call Debit: 3.90 – this order has filled

We have on a risk reversal spread in DKNG. We were exercised on the short put to buy 100 more shares of DKNG. We have sold our long put this morning. And we have sold a short-term covered call against the shares put to us. Sell to open: DKNG Jan 19th (monthly) 35.50 strike call Credit: 0.15 Sell to close: DKNG Jan 19th (monthly) 35.00 strike put Credit: 1.18

We are closing the covered LEAPS position in Verizon (VZ) today. We were long a very long-term call option. Against it we were selling short-term calls. We had sold a January 19th 39.00 strike call against our LEAPS previously. That call was exercised overnight leaving us short 100 shares of stock. That is not a problem for us overall. The owner of the call did this to capture the dividend. If they stayed in the long call position they wouldn’t receive the dividend payment. However, they wasted the remainder of the time value. And on top of that, the stock not only was marked down the dividend amount but sold off further this morning. So, the net result is a good thing for us. The details are shown below. Sold to close:  VZ June 20th, 2025 (monthly) 35.00 strike call Credit:  5.90 Bought to cover: 100 shares of VZ at 38.94 per share We were exercised short at 39.00 per share. So. the result is a gain of +0.06 or +$6.00 on the short. We are obligated to pay the dividend. So a debit (loss) of -0.665 or -$66.50 will be deducted from our accounts in the next couple of weeks. We bought the LEAPs call position for 4.57 debit and exit for 5.90 credit. A gain of +133.00. The overall result is a profit of +$72.50. For a position that had gone against us originally, we will take it. In addition, we have entered into a put butterfly in SPY as follows: Buy to open: SPY Jan 31st (weekly) 470.00 strike put (ratio of 1) Sell to open: SPY Jan 31st (weekly) 457.00 strike put (ratio of 2) Buy to open: SPY Jan 31st (weekly) 445.00 strike put (ratio of 1) Debit: 1.92 Max risk = 1.92 or $192.00 per spread Max reward = 11.08 or $1,108.00 per spread