2/14/2021 Plan:
We have a variety of ideas this week, including a put spread in Facebook (Ticker: FB) and some other put sales, put spreads, and a call spread concept
2/14/2021 Plan (continued):
- FB – Sell March 12th 250/245 put spread for 0.65
- HIG – Sell March 19th 45 put for 0.55
- DAL – sell March 19th 35 put for 0.35
- DFS – Sell March 19th 80/77.5 put spread for 0.25
- JWN – Sell Feb 26th 30 put for 0.35 (will take above 0.30)
- C – Sell March 12 58 put for 0.60
- MSFT – Sell Feb 26 252.5/257.5 call spread for 0.58**
- Prices are as of market close 2/12/2021, 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
2/14/2021 Commentary:
The Facebook put spread assumes that the shares won’t drop more than $20 in the next several weeks. Facebook can move, so we will need to watch this one closely and recognize it has higher risk. You can put on less spreads accordingly.
The DFS put spread is lower risk, but also on the low end of the reward range. I would also be willing to pick up shares of Discover near the is level if we dip below 80 at expiration.
There are a lot of put sale ideas at favorable levels and decent rates of return. As always, only place these trades if you have the capital to take the shares. If you want to trade them only – put on fewer and be prepared to roll or simply close and take a loss. The Delta Airlines (DAL) put is questionable – I will likely only put it on if I can get a bit more.
The MSFT call spread is not a full recommendation, but I wanted to provide the trade for a couple reasons. First, we have the market at all time highs. If you are trading a portfolio that has lots of bullish positions, you will take a big hit if the market overall goes down. Having some bearish positions helps round things out. Microsoft hit its all time high last week and this trade profits if it doesn’t go up another ~3%. You can pick other names that you don’t believe will continue to rally, adjust the strikes and duration to best fit your profile.
Remember – the market is closed tomorrow (2/15/2021), so these trades won’t be placed until 2/16. Prices will have moved around, so we’ll be flexible with our entries this week.
Reach out with any questions on this or any other trade!
2/16/2021 Entry:
We sold the March 19th FB 250/245 put spreads for 0.73. Alternatively can sell one week prior for between 0.50 and 0.55.
Sold the C March 12th 58 puts for 0.64
Sold the HIG March 19th 45 puts for 0.55
As a reminder, sell puts if you’re willing to own shares.
The JWN, DFS, and DAL trades were not available and are put on the watch list. As a reminder, if we are not happy with the risk/reward, we will often defer a trade rather than forcing it.
2/21/2021 Update:
FB dropped a lot on Friday and the put spreads are now against us and are worth 1.23 – we’re down $50/spread. Keep an eye on this one. For those with smaller accounts, consider taking a small loss and moving on. I’ll be holding it, likely through this week at least. If we do see a couple more days of big moves down and the stock threatens the short leg, we may pivot and jettison the position. A member update will go out if that occurs.
The C put is “0.79” at the mid point, but this is because there is a very wide spread shown – it is realistically worth about 0.30. We’ve pulled in about half the profit and one could take it and mostly cancel out the FB paper loss. I’ll be holding as I expect more decay this week and am still looking to add C shares at these levels.
The HIG put is down to 0.40, for a profit of $15 so far.
Note the DFS put spreads were available on 2/17/2021 for 0.26, they are now down to about 0.18
2/28/2021 Update:
FB is near 257.5 and our spreads are worth about 1.5. It recovered a bit from Thursday’s drop, but remains pretty close to our short strike. IV has gone up in the name and the rest of the market, which implies the larger moves will continue. I’m personally leaving this on, but this is a candidate to consider closing for a small loss.
The C put is about 0.22 at the mid point and can be closed for a nice win or you can let it go a bit longer to try and collect some more premium. You can also close this in conjunction with the FB spread and another winner to take some risk off the table.
The HIG puts are down to 0.20, giving us a $35 profit so far. I’m leaving this one on for at least another week. Again with some paper losses in spreads (PG, FB), this is another candidate to close.
The DFS put spreads are now worth only 0.10, for a profit of $16/spread. I’ll leave these on for at least another week.
3/7/2021 Update:
FB ended the week at 264.4. Our put spreads are down just a bit worth 0.79/spread (0.06 paper loss). The plan is to continue to hold throughout the week and take advantage of theta decay. If there is a big move down, we’ll consider cutting losses. If there isn’t a lot of movement, I expect these to be worth half what they are today by this Friday.
The C put expires this week and is down to just 0.09. If you are light on margin, go ahead and take this off to book the win.
The HIG put is down to 0.13. This doesn’t expire until next week. I’ll be leaving it on, but again, if you are light on margin or looking to take risk off there is no harm in booking a win.
The DFS put spreads are still worth 0.10. They expire next week and I’ll leave them on for the time being as they are $18 OTM.
3/14/2021 Update:
Facebook ended above 268 and our put spreads decayed nicely and are worth only 0.26 vs. the 0.73 we sold them for initially. They expire this week and can be taken off at any time to capture the profit. If we Do see a big move down in Facebook this week, pull the position off before it turns into a loss.
The C put expired bringing in another $64 in profit for our account.
The HIG puts expire this week and are effectively worthless. Close it at any time.
The DFS put spreads expire This week (off by a week in last week’s update…). With the big move up in Discover, these are very far OTM and will likely expire worthless, capturing a nice profit this week.
3/21/2021 Close:
The HIG puts and DFS put spreads expired worthless, bringing in a bunch more profit to our accounts $55 on the HIG puts and $26 per DFS put spread ($130 for 5). The Facebook put spreads also expired worthless bringing in $73 per spread ($146 for 2). This single week of trades brought in more than an annual membership! Might be time to re-look at pricing…
Reach out with any questions on this or any other trade!
