1/10/2021 Plan:
This week we look at a few ideas, including a put sale (or put spread) in Nordstrom (Ticker: JWN):
1/10/2021 Plan (continued):
- JWN – Sell February 5th 26 put for 0.26 (may be hard to fill) OR
- JWN – sell the February 5th 29/26 put spread for 0.39 OR
- JWN – Sell February 5th 27.5 put for 0.40
- DKNG – Sell January 29 45/41.5 for 0.51 Speculative
- MSFT – Sell January 29 205 put for 1.64 Earnings premium – only if you want shares
- Prices are as of market close 1/8/2021, 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
1/10/2021 Commentary:
Nordstrom has had a Huge move up since November. Vaccines are being administered and confidence in increased shopping is now baked into the share price. With the overall market high, these trades allow for a potential significant pull back in JWN and we can still be profitable. I like selling options here given the large implied volatility over historical volatility. I’ve provided two put values depending on your preferred risk/reward. The spread is quite nice, but clearly leaves less room for JWN to fall.
A speculative trade for this week is the DraftKings (Ticker: DKNG) 45/41.5 put spread for 0.51. Speculative trade for an online gambling name.
We are heading into earnings (again) – if you are looking to add long term positions in different names, you can sell puts at an increased volatility level. With earnings, we shouldn’t be surprised to see a big move, so only sell puts in names you are willing to own around earnings.
MSFT Jan 29 205 put for 1.64 (at the midpoint) came up with our analysis tools as an ideal strike to sell in the 12-15% annualized return range. This includes earnings.
INTC Jan 29 46 put for 0.39 also came up with our screens. Again this includes earnings and we’ve written about INTC a lot in the past – not a flawless name. Another concern here is that it has had Big drops the last two earnings cycles – I am not putting this one on personally.
Reach out with any questions on this or any other trade!
1/11/2021 Entry:
We sold the Feb 5 37.5 put in JWN for 0.32 (better prices are available) and the 29/26 put spread is available for 0.36 for those uninterested in shares. The DKNG Jan 29 45/41.5 put spread could be sold for 0.41. I personally added some of these. Volatile market today with quite a few big names down a lot (TSLA) keep your size in check.
1/17/2021 Update:
The JWN bid/ask is skewed during after hours, but they can be taken off when the market opens for fairly small values. We’re $7 OTM on the spreads and almost 9 on the naked puts
The DKNG put spreads are down to 0.25 – a nice win so far, with another couple weeks left to go.
1/24/2021 Update:
The JWN put spreads are almost worthless at over $8 OTM. Feel free to close this week to lock in the gain. Similarly the DKNG put spreads are only worth 0.03-0.04 – they expire this week and are $7+ OTM.
1/31/2021 Update, Partial Close:
The DKNG put spreads expired worthless brining in 0.51 per spread for an additional $51 profit in our account per spread. The JWN puts and put spreads are still pretty far out of the money, but should be monitored this week as the market has been volatile.
2/7/2021 Close:
The JWN puts and put spreads expired worthless, brining in the full credit – 0.36 per spread or 0.32 for the puts.
Reach out with any questions on this or any other trade!
