10/04/2020 Plan: With a drop in Micron (Ticker: MU) last week, we look to sell a put spread in it.
10/04/2020 Plan (continued):
- MU – Sell 2 of the October 23rd 42.5/40 put spreads for 0.34.
- Prices are as of market close 10/02/2020, actual fill and strikes may differ depending on Monday’s open, post will be updated accordingly.
- All trades are for educational purposes and do not constitute advice
10/04/2020 Commentary:
Micron had earnings last week and sold off and then sold off some more with the market to end the week. This trade assumes that the significant sell off in the specific name is done and provides a $4 buffer if the overall market continues to decline over the next few weeks. The straddle that week is ~$4, which places this spread just outside of it on the downside.
The return if the spread expires worthless is a bit under 16% (34/216 = 15.7%).
If MU bounces on Monday and we can’t fill the spread, we’ll look at a potential put or put spread in Hartford Financial (Ticker: HIG) as a backup:
- HIG – sell Oct 16th 34.5 put for 0.30 (or if HIG drops a bit, spread against the 32 for 0.25)
- HIG – sell Oct 23rd 34/32 put spread for >=0.20
Reach out with any questions on this or any other trade!
10/5/2020 Entry:
We fill MU 42.5/40 put spreads for 0.30. Oct 30 expiration. With the market pop this AM we go out 1 week and take a few cents less.
10/11/2020 Update:
With the move up in MU this past week, our put spreads are now only worth 0.08. They can be taken off at any time for a solid win.
10/18/2020 Update:
MU ended the week at 51.60, leaving our put spreads far out of the money. The short leg can be closed for about 0.08, the spread for 0.05-0.06. These can be taken off to secure the win at any point. The market is displaying a wide bid/ask on the short leg, expect it to tighten at the open tomorrow.
10/25/2020 Update:
Micron is almost at $53, leaving our short leg more than $10 OTM for expiration week. You can easily take off the short leg for $0.02 to remove the risk in the position and book another win!
10/31/2020 Close:
The put spreads expired worthless this week, allowing us to take in the full $30 per spread, or $60 if the sizing recommendation was followed. This was another nice win and never really threatened the short strike, making it easy to manage. Reach out with any questions on this or any other trade.
