Author: Bryan Halliday

We are placing a short-term targeted butterfly in QQQ. The selling may intensify into expiration next week. In which case, this is a low risk/high reward way to try to take advantage.

Buy to open: QQQ Feb 20th (monthly) 595.00 strike put (ratio of 1)
Sell to open: QQQ Feb 20th (monthly) 585.00 strike put (ratio of 2)
Buy to open: QQQ Feb 20th (monthly) 575.00 strike put (ratio of 1)
Debit: 0.87
Max risk = 0.87 or $87.00 per spread
Max reward = 9.13 or $913.00 per spread

This is our 2nd newsletter today. There was an issue and the first one this morning was delayed going out. Hopefully this goes out immediately. It is currently 1:00 pm EST. The CEG bear put spread order has been filled! We are going to make some additional changes to the portfolio as follows: Took profits on our entire KVUE position. This was a “merger arbitrage” trade and worked out overall. Sold all 30 shares at 17.94 Buy to close: KVUE March 20th (monthly) 20.00 calls (ratio of 2) Debit: 0.09 We did NOT close the 23.00 calls as there is no value in them and they can only benefit us in the event that the stock goes crazy. We took profits on 2 of our 4 butterfly spreads in SPY. The main reason is to buy a butterfly spread in QQQ in its place. That may be where the better moves are to be had! Sell to close: SPY April 17th (monthly) 670.00 strike put (ratio of 1) Buy to close: SPY April 17th (monthly) 640.00 strike put (ratio of 2) Sell to close: SPY April 17th (monthly) 610.00 strike put (ratio of 1) Credit: 2.65 Entered into a put butterfly spread in QQQ. Buy to open: May 15th (monthly) 580.00 strike put (ratio of 1) Sell to open: May 15th (monthly) 550.00 strike put (ratio of 2) Buy to open: May 15th (monthly) 520.00 strike put (ratio of 1) Debit: 2.39 Max risk = 2.39 or $239.00 per spread Max reward = 27.61 or $2,761.00 per spread

Our favorite idea continues to be Berkshire Hathaway B shares. They are fundamentally sound and have a lot of cash. While they are not immune to a market downturn, they are well positioned to weather any storm. We bought 8 more shares in our Robinhood automated account. Bought 8 BRK-B shares at 502.73 In addition, we have placed an order to take profits in the Put Spread we bought in CEG. We anticipated a little more downside in the stock and wanted to take advantage of it. The details are as follows: Sell to close: CEG March 20th (monthly) 280.00 strike put Buy to close: CEG March 20th (monthly) 270.00 strike put Credit: 7.00 – pending order as it has not executed as of yet We entered the position at 4.20 debit and if we get an exit at 7.00 credit. The result would be a profit of +2.80 per spread.

This morning PayPal announced earnings and is down sharply. We have some short puts so the stock will be “put” to us at February expiration. As such, we will get a head start on selling covered calls for income. These calls are “naked” in the sense that we don’t own the stock yet. However, since there is a 99% probability of owning the stock in a couple of weeks, we don’t see them as fully naked. The more conservative route would be to wait to sell covered calls until after expiration which is fine to do as well. The covered call is as follow: Sold to open: PYPL Feb 20th (monthly) 47.00 strike call Credit: 0.27 If the stock finishes below 47/share the calls expire. If the stock finishes above 47/share we could buy back the calls to continue owning the stock. Or, let our stock get called away and move back to selling puts again. If the stock were to move above 50/share, then we could end up “naked” the calls and would hedge accordingly.

The price action in the markets is not great. Huge reversals in precious metals as well. Most likely lower prices are coming in stocks for a while. We have added a few positions to the mix.

Bought 4 contracts of SPY Put Butterfly Spreads.
Buy to open: SPY April 17th (monthly) 670.00 strike put (ratio of 1)
Sell to open: SPY April 17th (monthly) 640.00 strike put (ratio of 2)
Buy to open: SPY April 17th (monthly) 610.00 strike put (ratio of 1)
Debit: 2.35
Max risk = 2.35 or $235.00 per spread
Max reward = 27.65 or $2,765.00 per spread

Bought a Bear Put Spread in CEG.
Buy to open: CEG March 20th (monthly) 280.00 strike put
Sell to open: CEG March 20th (monthly) 270.00 strike put
Debit: 4.20
Max risk = 4.20 or $420.00 per spread
Max reward = 5.80 or $580.00 per spread

Bought a 1×2 Put Spread in UBER
Buy to open: UBER March 20th (monthly) 77.50 strike put (ratio of 1)
Sell to open: UBER March 20th (monthly) 70.00 strike put (ratio of 2)
Debit: 0.95
Probable risk = 0.95 or $95.00 per spread
Max risk = owning 100 shares at a 63.45/share cost basis
Max reward = 6.55 or $655.00 per spread

This is our 2nd newsletter today. We added a VERY speculative position. This is certainly not an ideal position for most investors/traders. The potential to lose the entire investment is possible. The potential to double or triple the investment is also there. We have sold a cash secured put on a very very small cap stock. The company is a specialized tech services company that support data center infrastructure, high-performance computing and AI. It is a true small cap with a market cap of only 308m. We took the premium received from selling the short put and bought shares of stock. The details are as follows: Sell to open: TSSI Feb 20th (monthly) 10.50 strike put Credit: 1.00 Max Risk = $1,050 (getting put the stock at 10.50/share cost basis and having it go to zero in value) Max Reward = 1.00 or $100.00 However, we took the $100 received and bought 10 shares of stock at 10.63 per share (total cost of these shares was $106.30 so we used $6.30 from our cash reserve along with the $100 received) This is a VERY high risk/speculative style of stock!!!

We added a couple of shares of stock in our automated portfolio builder account as follows: Bought 1 share of BRK-B at 473.41 Bought 1 share of NUE at 171.94 Bought 2 shares of UNH at 289.54 – we didn’t own any shares of UNH and this is a first purchase, we did NOT set it up as an automated investment but may add to the position over time. In addition, we added the following trade setup in BIIB. This is the first pullback with the 20/50 bearish crossover setup. The company reports earnings on February 6th which will impact our trade but we like the setup overall. Buy to open: BIIB April 17th (monthly) 170.00 strike put (ratio of 1) Sell to open: BIIB April 17th (monthly) 150.00 strike put (ratio of 2) Buy to open: BIIB April 17th (monthly) 130.00 strike put (ratio of 1) Debit: 3.60 Max Risk = 3.60 or $360.00 per spread Max Reward = 16.40 or $1,640 per spread

We entered into a couple of new positions this morning. This brought in cash flow and we turned around and used it to buy a few shares of stock.

Sold a short put on DELL. This is only if willing to own 100 shares of stock at 100/share.
Sell to open: DELL Feb 20th (monthly) 100.00 strike put
Credit: 1.78

Sold 2 contracts of short puts on PYPL. This is only if willing to own 200 shares of stock at 50/share.
Sell to open: PYPL Feb 20th (monthly) 50.00 strike put
Credit: 0.85

Collected a total of +$348.00. We used it plus a tiny bit of leftover cash to buy the following shares of stock:
Bought 1 share of ABNB at 130.94 per share
Bought 1 share of DELL at 111.51 per share
Bought 1 share of CCJ at 118.59 per share

We are taking profits on the butterfly spreads in XLE and SNOW. We have closed the remainder of our butterfly spreads on XLE for a profit as follows: Sell to close:  XLE Jan 16th (monthly) 46.00 strike call (ratio of 1) Buy to close: XLE Jan 16th (monthly) 48.50 strike call (ratio of 1) Sell to close:  XLE Jan 16th (monthly) 51.00 strike call (ratio of 1) Credit:  1.68 Profit of $1.11 or +$111.00 per spread We have closed SNOW butterfly for a profit as follows: Sell to close:  SNOW April 17th (monthly) 220.00 strike put (ratio of 1) Buy to close: SNOW April 17th (monthly) 190.00 strike put (ratio of 2) Sell to close:  SNOW April 17th (monthly) 160.00 strike put (ratio of 1) Credit:  7.20 Profit of $1.85 or +185.00 per spread