Author: Bryan Halliday

We exited our delta hedge in PayPal (PYPL). The risk of the stock ending up above 65/share and getting zero for the spread is now a very low possibility. It served its purpose and now we are in a great position to be successful to some extent overall. Sold all 34 shares of PYPL at 60.05 per share.

This is our 2nd newsletter today!
We are closing the 1×2 Put Spread in ABNB and using the profit to buy 1 share of the stock. This stock has performed much the way we had expected. However, it is hanging out near our long put strike price. That means that we are in danger of having a max loss if it stays here or goes higher (2 of 3 directions). We would be in great shape if it were to fall sharply but there is less time. We are taking profits and if the market falls further, our SPY hedge will capture it.

Sell to close:  ABNB Nov 21st (monthly) 120.00 strike put (ratio of 1)
Buy to close:  ABNB Nov 21st (monthly) 105.00 strike put (ratio of 2)
Credit:  2.89
This locks-in a profit of +$121.00 per spread. We bought 1 share of ABNB at 120.72 per share.

We had previously added a 1×2 put spread to work in combination with our long put in SPY. It expired earlier this week for a small loss of the debit paid. Today we have replaced it by adding another 1×2 put spread. This has a small credit but the majority of profit would come if SPY continues to decline.

Buy to open: SPY Nov 21st (monthly) 655.00 strike put (ratio of 1)
Sell to open: SPY Nov 21st (monthly) 640.00 strike put (ratio of 2)
Credit:  0.13
Probable reward = 0.13 or $13.00 per spread
Max reward = 15.13 or $1,513.00 per spread
Max risk is the stock falls below the breakeven of 624.87/share. Since we own the December 650 put working with this trade and it would go up in value in that scenario, it is less of a risk to us.

In class on Monday we discussed the buy-out of Kenvue (KVUE) by Kimberly Clark (KMB). Today, we have entered into an option trade to see if we can take advantage of some merger arbitrage. This does not have a great probability of success but the Reward/Risk is excellent. The details below. Buy to open:  KVUE March 20th, 2026 (monthly) 17.00 strike call (ratio of 1) Sell to open:  KVUE March 20th, 2026 (monthly) 20.00 strike call (ratio of 2) Buy to open:  KVUE March 20th, 2026 (monthly) 23.00 strike call (ratio of 1) Debit: 0.49 Max Risk = 0.49 or $49.00 per spread Max Reward = 2.51 or $251.00 per spread The buy-out price is $21.01 but that will fluctuate based on KMB stock. We have gone with a more conservative target at 20/share. If the stock were to push up to 21/share, that would still be a very profitable outcome.

We have our process in place to make recurring purchases of stocks every week. Today we bought a few shares of EQT in that account. This is similar to BRK-B in that we have not added these stocks to the recurring purchases list. But it is one of our favorite in the Energy sector overall and we wanted to potentially build a position further in the future. Bought 10 shares of EQT at 53.80

Recently, many of the major auto suppliers around the country had to declare bankruptcy. JPMorgan Chase CEO Jamie Dimon said there is rarely only 1 cockroach. Today we are seeing a bit of turmoil in the regional bank stocks. While this may not evolve much, there is risk and we will do a bit of hedging. This is the first time I have returned to hedging in months. Although the hedges I did during the spring around Tariffs did not pan out, the big market recovery more than made up for it. I see the same type of risk/reward today. We are adding a small educational hedge as an example trade as shown below. Of course, larger hedges could make sense depending on your own situation, account size and market outlook overall. Bought to open: SPY Dec 19th (monthly) 650.00 strike put Debit: 15.70 Max risk = 15.70 or $1,570 per contract traded Max reward = undefined as gains can grow the further the market declines

We are entering into a short-term stock trade in Paypal (PYPL). This is based on the 1-hour chart and a bollinger band setup. This is a very short-term trade and could turn into a day trade. Bought: PYPL stock at 73.40 Sell: PYPL stop loss at 72.05 – gtc (good til canceled order) To detemine how many shares to buy, use the following equation. Divide the dollar amount you are willing to risk by the risk per share in the trade. For example, if you were willing to risk $100 divided by the risk per share of 1.35 = 74 shares. Do the math to determine a reasonable position size!