We have sold a short put on PYPL to buy 100 shares more of the stock at lower prices. If the stock is “put” to us in May that will use up the remainder of our cash at this time. Of course, we always have an influx of capital going into the account each month. We like the probability of being able to generate income and paying off our investment in PYPL over the coming years from the income received in the options market.
Sell to open: PYPL May 16th (monthly) 55.00 strike put
Credit: 2.80
Max risk = owning 100 shares of stock at a 52.20 cost basis
Max reward = 2.80 or $280.00 per contractWe are buying back (lock in profits) on one of our covered calls in CCJ. And then replacing it with a 1×2 call spread as follows:
Buy to close: CCJ May 16th (monthly) 50.00 strike call
Debit: 0.29
Buy to open: CCJ June 20th (monthly) 42.00 strike call (ratio of 1)
Sell to open: CCJ June 20th (monthly) 48.00 strike call (ratio of 2)
Debit: .37
Max risk = .37 or $37.00 per spread
Max reward = 5.63 or $563.00 per spread