7/19/2020 Plan: Two ideas this week – both are bullish cash secured put spreads – feel free to pick one or the other based on your account size, or consider spreads. Slack (Ticker: WORK) and Prudential (Ticker: PRU)
7/19/2020 Plan (continued):
- WORK – Sell 1 of the 21 August 26 puts for 0.41. You could spread with the 24 strike for 0.24.
- PRU – Sell 1 of the 21 August 52.5 puts for 0.60. You could spread with the 50 put for 0.25 (bare minimum).
- Prices are as of market close 7/17/2020, actual fill and strikes may differ depending on Monday open, post will be updated accordingly.
- All trades are for educational purposes and do not constitute advice
- As always, reach out with any questions!
7/19/2020 Commentary:
These are both bullish trades, but will remain profitable at expiration even with significant drops in the underlying. Specifically, WORK has to drop 19% to hit its short strike, about 18% for PRU. We’re happy to pick up shares in these names at these levels and sell covered calls against them if we are assigned. We can also, optionally, roll the puts depending on where the underlying goes.
Slack is a communication platform for businesses and continuing to grow strongly. This is a name we have traded in the past as a Silver trade (https://optionsalary.com/trade-ideas-week-of-2020-03-16). It is Very popular with its users and the name should be supported well as COVID-19 continues on.
The second trade is for a very different type of company, Prudential, which is in the financial industry – primarily insurance. I have traded in and out of PRU for quite some time and like that it has continued to increase its dividend. It pays $1.10 per quarter, currently. If we’re assigned at 52.50, we’ll be receiving a yield of 8.4% (4.40/52.50)! We’ll happily collect this while we write covered calls against it.
Reach out with any questions on this or any other trade!
7/20/2020 Entry-
Sold PRU 52.5 21 Aug put for 0.60 as expected. WORK has increased in value and the short put is not currently available for acceptable pricing. Will monitor during the week and consider selling a put on a dip.
7/26/2020 Update:
The short put in PRU is worth about 0.40 now, resulting in a $20 profit if we close. A great start for the first week and we’ll plan to leave it open.
8/2/2020 Update:
PRU was down on the week and our put still lost a little value down to about 37.5 at the midpoint. We’ll leave the put open for the time being.
8/9/2020 Update:
Our PRU put is down to 0.10. You can leave it open to try and collect the remaining premium or close it for a nice win. I’ll put in an order to sell it at 0.05.
8/11/2020 Close:
We buy back the PRU 8/21/20 short put for 0.05 for a win of $55 per put sold. This frees up capital almost 2 weeks early as well.
