1/3/2021 Plan:
Happy New Year!!
This week, we take a look at variety of trade ideas – some put sales and some put spreads in CRM, HIG, GM, MET, and PFE. In 2020, we started the year primarily highlighting one trade per week. As the year progressed, based on member feedback, we added more trades and provided some other ideas to consider. In 2021, we’ll follow the approach of providing more trades, leaving our members to do a bit of their own due diligence. You will need to be mindful of your position size/risk based on your account size. Always reach out with questions and keep the feedback coming! Let’s look at Pfizer (Ticker: PFE)
1/3/2021 Plan (continued):
- PFE – Sell January 29th 34.5/32.5 put spread for 0.25 (or the 34.5 put for 0.36)
- CRM – Sell January 15th 210/205 put spread for 0.59 OR
- CRM – Sell January 29th 205/200 put spread for 0.61
- HIG – Sell January 29th 44.5 put for 0.45 (or 45/43 put spread for 0.22)
- GM – Sell Jan 29 37 put for 0.42 (or 37/35 put spread for 0.20)
- MET – Sell Jan 29 43 put for 0.43 – take >= 0.40 (or 43/40.5 put spread for 0.26)
- Prices are as of market close 12/31/2020, 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
1/3/2021 Commentary:
Pfizer’s return in 2020 was a bit less than 3.5%. Kodak (Ticker: KODK) was up 75% (it was up about 15x during a run-up in July). One of these companies is *literally* helping to save the world and the other invented digital cameras … and then threw away that business in favor of film…
Looking forward, I’d rather trade the former than the latter. The 34.5/32.5 assumes Pfizer’s recent decline continues to be slow and we have a $2.3 buffer before our short strike. One can move the strikes up to take in a bit more premium at lower probability of success. I like selling puts at the 34 or 34.5 level as well.
CRM looks to have good support at 220 and our put spreads are well below that. Again, can trade closer to the current price to adjust the risk/reward levels. I’ve also offered two different dates to choose from at similar premium levels. I like the nearer term trade more as I’ll have enough positions expiring on the 29th.
HIG – I’d like to add shares longer term and like the 44-45 level to do so.
GM – a carry over from last week and on my list to trade
MET – Another name I’m ok owning more of and a frequent trade in 2020.
Note that all of these names have pretty favorable volatility setups with IV>HV.
As a reminder, if you put on all of these trades, note the amount of risk you’re taking on and make sure it is compatible with your portfolio size, your goals, and your risk tolerance.
Reach out with any questions on this or any other trade!
1/4/2021 Entry:
We sold the Jan 29 34.5/32.5 put spread in PFE for 0.35. With the name down (along with the rest of the market), we received more premium. You also could have selected lower strikes or an earlier expiration. All the other trades were available as well. I held off on CRM, personally, but did take advantage of the higher IV in MET, HIG, and GM.
1/10/2021 Update:
The Pfizer put spreads are worth about half what we put them on for, down to 0.17. If you put on larger than normal size, consider booking some profits.
The MET short put is down to only 0.11 (I entered the 42 strike at 0.48). Given there are still a few weeks, for most, I’d consider closing it down for the win.
The HIG put is down to 0.25 (from an entry of 0.55 for the 44.5 put). I will be keeping this one for a bit longer.
The GM put (36 put for 0.44) is down to 0.11 – this is another that can be easily closed having captured 75% of the premium.
1/17/2021 Update:
The Pfizer put spreads have decreased to 0.14. It will take a while before these fully decay. Keep an eye on them this week – if the market sells off, once can close to book the win.
The GM puts are basically worthless at just 0.04. Close whenever you want as they still have two full weeks to capture that 0.04. You can also Buy a higher put if you want a very cheap downside hedge.
The HIG puts are down to 0.15 – a nice winner that can be closed or kept to try and squeeze a few more dollars. I’m happy taking the shares and will leave it open, but if your margin is running out, take this and the GM profits and move on.
The MET puts are only 0.05 Same approach as GM/HIG. Enjoy the wins!!
1/22/2021 Partial Close:
Closing most of my PFE put spreads but buying back the short leg for 0.05 to 0.06. The long leg can be sold for 0.01 or left as a lotto ticket. Another great win for members!
1/24/2021 Update:
With the GM puts almost $20 OTM, those can be closed for a couple pennies or just left open (extremely small probability of assignment). Same for the HIG and MET puts. Each of these should expire worthless, capturing additional gains for our accounts! Do note that they all expire this week.
1/31/2021 Update/Close:
The market fell last week but all of our puts expired worthless, bringing additional profit to our accounts. $48 for the MET puts, $55 for the GM puts, and another $44 for the HIG puts. A great week for our members!
