2/7/2021 Plan:
This week we look at a few ideas, including a put sale in Pfizer (Ticker: PFE) and a put spread in P&G (Ticker: PG)
2/7/2021 Plan (continued):
- PFE- Sell March 5th 34 put for 0.47 OR
- PFE – Sell March 5th 34/32 put spread for 0.35
- PG – Sell Feb 19th 127/124 put spread for 0.44 OR March 5th 125/122 for 0.56
- C – Sell March 5th 57 put for 0.57+
- Prices are as of market close 2/5/2021, 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
2/7/2021 Commentary:
The put sale in Pfizer is for those that want to pick up 100 shares (per put) at a decent price. This is only ~3% Out of the money, so if you don’t want PFE shares, it makes sense to skip this one. Pfizer hasn’t spent much time below 34 since last summer. If assigned, it should be a pretty easy stock to sell covered calls against, while collecting an over 4% yield with the dividend. The spread will cap your downside in case there is a major event in the market (or Pfizer) and limit your loss in exchange for 1/4 of the credit.
The PG put spread is pretty close to the money and assumes that PG is finished dropping for a while (it has consolidated a bit at these levels). One can move out another couple weeks and sell the 125/122 for 0.56. Actual strikes and expiration will depend on where the market opens up, but I am leaning towards the latter.
Both of these trades are a bit closer to the money and have higher probabilities of finishing in the money – keep that in mind when you decide whether to follow and set your position size accordingly.
The Citigroup (Ticker: C) put sale is just below the recent low and would result in about 1% return on the total risk. Not a life changing return, but these add up over time. As with other put sales, only put them on if you are willing to take the shares (or roll the put). Citibank currently trades well below its book value and I’m good with adding shares at this level.
Not a trade recommendation this week, but since many have asked – I’m out of all of my GME put calendars. If/when TD Ameritrade allows for complex orders again in GME, I may put more on (assuming the IV is still ridiculously high in the name).
Reach out with any questions on this or any other trade!
2/8/2021 Entry:
We sold the March 5th PG 124/121 put spreads for 0.45.
We also sold the March 5th PFE 34 put for 0.46, trying to get long shares. The 33.5/31.5 was available for 0.25
2/14/2021 Update:
The PFE put is essentially flat (we are up $1). Same with the put spread which is now worth 0.24. No change to the position this week is planned.
The PG are down a bit as they are now worth 0.50 (vs. the 0.45 we sold them for). No planned change this week with PG trading at 127.62. If PG stays near this level, we should expect to start seeing some decay this week.
2/21/2021 Update:
The PFE put is worth 0.38, we’re up about $8 on it. I’ll be leaving this on as is.
The PG put spreads are now worth 0.35, which gives us a profit of $10 per spread so far. I’ll be leaving this on as well through this week.
2/28/2021 Update:
The PFE put is now in the money and expires on Friday. I’ll be taking the shares and selling covered calls against them. Another approach is to ‘roll’ the put, which closes this week’s put and resells one in a future week. For example, as of the market close on Friday, you could roll it two weeks (March 19th expiration) and take in an additional $29.
The PG put spreads are also now in the money with Friday’s big move down of about $3 – a large move for PG. This can be played a few ways. If the market opens flat or down, simply cut our losses and close out the position (or part of the position). If the market opens up and these put spreads are OTM again, we can monitor closely during the week and get out if it dips again. These should be sized so that a total loss doesn’t hurt you much, but that doesn’t mean we need to Take a total loss. I’ll text exits if I take them – but please consider closing when you can on Monday to keep the loss small (about $47). Note if you have multiple spreads on, you can also consider closing a portion to reduce the volatility in your account balance.
Another approach for larger accounts is to let it run and if it expires slightly ITM, take delivery of the shares and sell covered calls against it. Note that you need $12,400 per put to do this. I may personally take this approach with some of the spreads as I like PG long term. If I do, I’ll track the progress through these updates.
3/4/2021 Update/Close:
Well certainly another entertaining week in the markets. The PG put spreads could have been closed for even on Monday and a text alert went out accordingly. If you took no action on these during the week they expired worthless for the full profit. Personally, I put on a limit order to close at 0.05 as I wasn’t able to watch the markets too closely and this was hit on Friday, bringing in a profit of $40/spreads.
The PFE puts also expired worthless, for a $46 credit per put sold.
