Author: Bryan Halliday

 

Sell to close:  SNOW Sep 15th (monthly) 160.00 strike call (ratio of 1) Buy to close: SNOW Sep 15th (monthly) 180.00 strike call (ratio of 1) This leaves the other short 180 call as a covered call against 100 shares of stock through Friday Credit:  8.80 We paid 2.15 debit for this spread, exiting at 8.80 credit. The result is +6.65 or +$665.00.

 

We are taking profits on our QQQ short this morning. Bought to cover: QQQ 30 shares at 369.87 Canceled the stop-loss order protecting the shares. We entered the short at 377.27 and closed at 369.87, the result is +$222.00 We don’t usually place stop-loss orders on option trades. This is due to multiple reasons including liquidity, small risk already built into the trade etc. However, our long VIX calls are a good example of when it can be used. There is ample liquidity in these options. And if this trade comes back to our original entry price, then something isn’t working as planned. So, we have placed a stop-loss at breakeven on our trade. If it keeps running, then that is great news for this trade and more profit overall! Sell to close: VIX Oct 18th (monthly) 15.00 strike call Stop-loss price: 2.20 Good til canceled (GTC) order

We tend to keep our risk small in this Trading Mentors program around at $500 or less. While that can change or be larger on occasion if we are making a bigger hedge or if we have a huge gap against us. We entered into a long put in ALB yesterday which cost $920.00 for the contract. However, we were always planning to keep that risk/reward much more in our comfort zone. So, barring a huge gap, we planned to take off the trade for better or worse for a couple hundred bucks. This one worked in our favor and we will take profits today. Sell to close:  ALB Oct 20th (monthly) 200.00 strike put Credit:  12.30 – this order has filled We bought this put for 9.20 and sold it at 12.30, the result is a profit of +$310.00 total. We also have a pending order to roll-up our VZ short calls that we sold against our LEAPS as follows: Buy to close: VZ Oct 20th (monthly) 35.00 strike call Sell to open: VZ Oct 20th (monthly) 36.00 strike call Debit: 0.21 – this order has filled

Bought a long call in the Volatility Index (VIX) as follows: Buy to open: VIX Oct 18th (monthly) 15.00 strike call Debit: 2.20 – this order has filled Max risk = 2.20 or $220.00 per contract Max reward = Unlimited Entered a put butterfly spread in SPY as follows: Buy to open: SPY Dec 15th (monthly) 450.00 strike put (ratio of 1) Sell to open: SPY Dec 15th (monthly) 425.00 strike put (ratio of 2) Buy to open: SPY Dec 15th (monthly) 400.00 strike put (ratio of 1) Debit: 3.50 – this order has filled Max risk = 3.50 or $350.00 per spread Max reward = 21.50 or $2,150.00 per spread Entering a long put in Albemarle (ALB) as follows: Buy to open: ALB Oct 20th (monthly) 200.00 strike put Debit: 9.20 – this is still a pending order Max risk = 9.20 or $920.00 per contract Max reward = Unlimited

This is our 2nd newsletter today. We have added a new short-term trade in QQQ as follows: Sold short: QQQ 30 shares at 377.27 Buy to cover stop-loss above at 383.54 gtc (good til canceled order) We rolled out our SNOW c.c. because nearly all of its value has been realized (bought back Sep for 0.01). We attempted to buy the Sep lower than 220 strike calls for 0.01 but couldn’t get filled (would have given us a small chance at a crazy win). In other words, if buying an option for 0.01, it is always best to buy the lowest strike you can get for 0.01. In this case, it was only our strike price (220) that was possible. Buy to close: SNOW Sep 15th (monthly) 220.00 strike call (only closing this because it will remove the “naked” risk and only costs 0.01 per contract). Sold to open: SNOW Nov 17th (monthly) 200.00 strike call Credit: 1.78

A few changes to the portfolio today. First, we took profits on our recently entered covered call in Target (TGT) and replaced it with short puts. This locks-in some profit and gives us a little different look. Sold: TGT 100 shares at 127.06 Buy to close: TGT Sep 15th (monthly) 130.00 strike call for 1.00 debit The net credit was 126.06 price. The result is a profit of +$341.00 We entered into a short put to replace this trade. Sold to open: TGT Sep 15th (monthly) 122.00 strike put Credit: 0.50 Max reward = 0.50 or $50.00 Max risk = owning 100 shares at 121.50 cost basis We have a covered call position in DELL that has blown out on the upside today. This is a worst case scenario with covered calls. While we are making money overall. We are losing out on a good portion of the upside. Given the big drop in HPQ earlier this week, a massive higher in DELL (a competitor) was not expected. For now, we will work to recover by selling puts to replace our stock set to be “called away” at September expiration. This adjustment does add risk if the stock were to collapse back down by Sep 15th, a risk we don’t see as likely. A fairly good sized move down to the 65.00 strike price would be a welcome sight! First, we are rolling up our covered calls to improve our position slightly (+0.50 per share benefit overall if we finish above 65/share) Bought to close: DELL Sep 15th (monthly) 55.00 strike calls Sold to open: DELL Sep 15th (monthly) 65.00 strike calls Debit: 9.50 Second, we are selling puts. This runs the risk of doubling our position size on a move below 65/share. So, if unwilling to own more shares, this is not the ideal adjustment. Assuming we finish above 65/share on Sep 15th, this adds +0.50 of benefit. Sold to open: DELL Sep 15th (monthly) 65.00 strike put Credit: 0.50

We own 100 shares of GOLD that don’t have a covered call sold. We have done that today. Sell to open: GOLD Oct 20th (monthly) 18.00 strike call Credit: 0.22 – this order has filled We own 300 shares of EFA so we added a 1×4 call spread. If one only owned 100 shares of EFA, then a 1×2 call spread could be considered. However, be aware that would take you from a small credit to a small debit on the trade. The details are as follows: Buy to open: EFA Oct 20th (monthly) 74.00 strike call (ratio of 1) Sell to open: EFA Oct 20th (monthly) 76.00 strike call (ratio of 4) Credit: 0.05 – this order has filled We have an order pending to enter into a bearish trade in FSLR today as follows: Buy to open: FSLR Oct 20th (monthly) 185.00 strike put (ratio of 1) Sell to open: FSLR Oct 20th (monthly) 170.00 strike put (ratio of 2) Buy to open: FSLR Oct 20th (monthly) 155.00 strike put (ratio of 1) Debit: 2.60 – this order is still pending Max risk = 2.60 or $260.00 per spread Max reward = 12.40 or $1,240.00 per spread

We entered into a new Bear Call Credit Spread in QQQ this morning. We will discuss live in class. Buy to open: QQQ Jan 19th, 2024 (monthly) 390.00 strike call Sell to open: QQQ Jan 19th, 2024 (monthly) 380.00 strike call Credit:  4.55 Max reward = 4.55 or $455.00 per spread Max risk = 5.45 or $545.00 per spread