Trade Alert 1/9/2024

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