Author: Bryan Halliday

This is our 2nd newsletter today. First, we added a few more shares to our QQQ short. We also adjusted our stop-loss to reflect that we are now short -50 shares total. Second, we exited the lower strike long call in our KVUE spread. This is the “money maker”. The deal for KVUE is not expected to close until the back half of this year. It seems unlikely that there is another buyer. We expect the stock now to simply gravitate around 17ish per share through March expiration. So, we exited the call and bought a few shares as a delta hedge against any risk above 20/share. This is an aggressive and higher risk adjustment because we are now “naked” on 1 of the 20 strike calls. The stock would have to surge above that level by March expiration (unlikely) but anything is possible. Rather than this adjustment, one could simply exit the entire call butterfly spread and take a small profit! Sold short 20 more shares of QQQ at 624.05 Adjusted the stop-loss to reflect 50 shares total. Sold to close: KVUE March 20th (monthly) 17.00 strike call Credit: 0.78 Bought 20 shares of KVUE stock to hedge risk against a big upside move (unlikely)

We entered into a longer-term “targeted” put butterfly in CCJ. Usually we only go out a few months. This one is all the way out to June. That means that we are planting a seed and it will require a lot of patience. We have multiple positions on CCJ. We own stock. We have a short put that should expire for a max gain in February. This is simply a case of a stock getting a bit ahead of itself and forming a little sign of “exhaustion” in the chart. Buy to open:  CCJ June 18th (monthly) 95.00 strike put (ratio of 1) Sell to open:  CCJ June 18th (monthly) 80.00 strike put (ratio of 2) Buy to open:  CCJ June 18th (monthly) 65.00 strike put (ratio of 1) Debit: 2.10 Max risk = 2.10 or $210.00 per spread Max reward = 12.90 or $1,290.00 per spread

QQQ had a little bit of a “false breakout” yesterday. Often “from false moves, come fast moves”. What that means is that on a false move, often the momentum on the other side is very fast. In this case, pointed downward! So, we are making a couple of changes within the portfolio. First, we will roll-down our DELL short put. Second, we will short some QQQ stock with a tight stop-loss so we don’t risk too much. Third, a new spread trade to profit from further declines. Buy to close:  DELL Jan 16th (monthly) 110.00 strike put Sell to open:  DELL Jan 16th (monthly) 105.00 strike put Debit: 0.77 This takes our prior max reward from the 1×2 put spread down by 0.77 but improves our potential cost basis in the stock if we end up owning it at expiration. Sold short 30 shares of QQQ at 620.74 Placed a Buy to cover stop-loss order for the 30 shares at 628.43 The stop loss is a GTC (good til canceled) order Max risk = 7.69/share x 30 shares = $230.70 Finally, entered into a put butterfly in Snowflake (SNOW) as follows: Buy to open: SNOW April 17th (monthly) 220.00 strike put (ratio of 1) Sell to open: SNOW April 17th (monthly) 190.00 strike put (ratio of 2) Buy to open: SNOW April 17th (monthly) 160.00 strike put (ratio of 1) Debit: 5.35 Max risk = 5.35 or $535.00 per spread Max reward = 24.65 or $2,465.00 per spread

We have taken profits on a piece of our 1×2 put spread. We sold the higher strike put owned and bought back 1 of the lower strike puts originally sold. We were already “naked” one of the 110 puts and will leave it that way into expiration. We had been selling short puts to acquire DELL shares previously. We saw an opportunity to profit a little more than just selling a put and it worked out. The exit details are as follows: Sell to close:  DELL Jan 16th (monthly) 125.00 strike put (ratio of 1) Buy to close: DELL Jan 16th (monthly) 110.00 strike put (ratio of 1) Credit:  5.65 Profit of $3.35 or +$335.00 per spread if the additional 110 put expires worthless. If it doesn’t then we get to acquire the stock at a discounted price!

Energy stocks are up this morning on the Venezuelan invasion. We have used this to take profits on 1/2 of our butterfly call spreads. These options were split along with the stock split that happened some weeks ago. After the split, our position went from 3 contracts to 6 contracts of the butterfly. Our cost went from 1.15 per spread to 0.575 per spread. And our strike prices were cut in half. We will discuss this position in class in a few minutes. 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 2) Sell to close:  XLE Jan 16th (monthly) 51.00 strike call (ratio of 1) Credit:  0.82 Profit of $0.25 per spread

 

Hello Investors, A compelling reason to consider a closer look at Nike (NKE) stock today is the rare and high-profile insider buying by Apple CEO Tim Cook, who serves as Nike’s lead independent director and recently spent nearly $3 million to purchase 50,000 shares at about $58.97, more than doubling his stake and signaling confidence in Nike’s turnaround strategy at current valuation levels. While the stock has been beaten down it still trades at a high valuation relative to its sector. These insider buys signal a vote of confidence that Nike is navigating through its operational challenges and suggest that the market may be pricing in excessive pessimism? This may be creating a valuation entry point for long-term investors who believe in the company’s brand strength and strategic reset. We don’t think we need to chase the stock higher on the news. However, we can use the Tim Cook price level of $59/share as a key support zone. It is highly likely that if/when the stock goes back to those prices it will be a level where a lot of buying takes place from market participants. You see much the same thing happen with Berkshire/Warren Buffett purchases. The levels they are buying are huge support for the stock going forward. And if buyers keep buying at those levels in the future, it is less likely to fall sharply below that zone. We are selling a put just below the Tim Cook price zone of $59/share as follows: This is only a reasonable strategy if willing to own 100 shares of stock at 57.50/share (investment of $5,750). Sell to open: NKE June 18th, 2026 (monthly) 57.50 strike put Credit:  3.35 Max reward = 3.35 or $335.00 per contract Max risk = buying 100 shares at 57.50 per share We took the $335 of income and bought 5 shares of NKE stock at 62.30 per share. Bought 5 shares of NKE at 62.30 Total cost of $311.50. We put the rest of the $23.50 in our cash pile.

 

Hello Investors,

We discussed precious metals today. How to value them as a currency. Historical ratios of Gold vs Silver and so forth. As such, while Gold has boomed, Silver has been the better buy over the past few years. In addition, we have sold another short put on CCJ. We used a little of the money to buy a share of PYPL. The details as follows:

Only to be done if willing to own 100 shares of stock at 75/share.
Sell to open: CCJ Feb 20th (monthly) 75.00 strike put
Credit: 1.15

Used some of the money to buy 1 share of PYPL.
Bought 1 share of PYPL at 60.31/share

We always manage spreads around expiration in the same manner. If we are at the long strike, we try to exit as early as possible. If we are near the short strike, or in the middle of the spread, we try to stay in the trade all the way toward the expiration. Our SPY 1×2 put spread position is in the middle of the spread. Unfortunately it has been moving higher today where a move down would have been more ideal. However, we still have some value in the 1×2 spread and a push lower in the stock is not out of the question. The management of this position will be as follows: Assuming the stock is well above the 668 strike, we can simply let those puts expire worthless. If SPY falls toward that strike, then we will close them as well. We absolutely will need to exit (sell) our 685.00 strike puts today before the close, here is the game plan. Sell to close: SPY Dec 19th (monthly) 685.00 strike put Credit: as much as possible (we will close around 15 minutes before the close of trading today roughly 3:45 pm ET) Rather than have a “naked” option, one could also “buy to close” the 2 contracts at 668 strike for 0.01 cost. Although they are very likely to expire worthless on their own.

It looks like there is some confusion on the UBER 1×2 put spread. I ended up with the December trade. However, in the newsletter we detailed trading this spread in January. The January position is superior. So, if you ended up with that position, the trade has even more profit. From here, there are really two choices. Either A- Exit the entire trade. Or B- Continue to hold onto the entire trade (both legs) and hopefully get a push toward 72.50 into next month at which time you would take profits. We won’t be managing it as we had the December trade. The exit would like as follows:

Sell to close:  UBER Jan 16th (monthly) 80.00 strike put (ratio of 1)
Buy to close: UBER Jan 16th (monthly) 72.50 strike put (ratio of 2)
Credit:  1.66
Profit of $1.01 or +$101.00 per spread (even more profit than the December trade)