4/18/2021 Plan:
This week we return to Axon Enterprise (Ticker: AXON)
4/18/2021 Plan (continued):
- AXON – Sell May 21 125/120 put spread for 0.75*
- ATVI – Sell 87.5 put for 0.90**
- DAL – sell May 7 43/41 put spread for 0.20 or the 44/41 for 0.41
- Prices are as of market close 4/16/2021, 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
4/18/2021 Commentary:
* First warning is that the AXON put spreads include earnings. We can see a pretty big decrease in historical volatility in this name while IV has remained high. It will stay high at least until earnings on May 6th. The inclusion of earnings makes this a more speculative trade, so please keep that in mind, and pass if you are looking ot reduce volatility in your account balance. The short strike is intentionally below the last dip.
** For the ATVI put, it also includes earnings on May 4th. This is a trade I am making fully Wanting to be assigned shares. ATVI hasn’t traded below 87.5 so far this year and if it does at expiration, I’ll hold the shares.
With earnings now past in Delta (Ticker: DAL), this trade assumes the recent sell-off stops. If one wants more premium, but with higher risk , the 44/41 can be sold for 0.41.
Three trades and each are pretty speculative given earnings (AXON, ATVI) or being close to the money in a declining name (DAL). The market has also run up quite a bit. As a reminder, it is ok to skip trades or take a week off. We’ve also shared some bearish trade approaches you can take in the past. If you “can’t sleep” or are worrying about your portfolio, you likely have too much risk on. Feel free to Reach out with questions on this or anything else!
4/19/2021 Entry:
Sold May 21 AXON 120/115 put spread for 0.45. Sold DAL May 7 43/41 put spreads for 0.27. Sold ATVI May 21 87.5 put for 0.90.
Market has started to sell off, first time in a while. Keep an eye on your exposure and overall risk. Do Not trade with money you can’t afford to lose. Do not sell ATVI puts unless you are ok taking the shares. AXON is the “safest” trade this week.
4/26/2021 Update:
The AXON put spreads have decayed some. The bid/ask is wide right now and shows a close for 0.20 – but it is unlikely we could close for that good of a price. No planned action on this trade this week.
The DAL put spreads have decayed to about 0.14. That’s a pretty good result after 1 week and one could reduce risk/take an early profit on this trade. I’ll leave it on a bit longer, but watch it closely and don’t let a winner get away from you.
The ATVI puts have moved against us as Activision sold off last week. As we’re prepared to take shares, no change in the position at this time.
5/2/2021 Update:
The AXON put spreads are still comfortably out of the money (30 handles) and worth about 0.20. It won’t decay much more until after earnings which are this week on the 6th. Earnings releases can cause a stock to move quite a bit, so if you want to reduce volatility in your account, close this out and book the win. If AXON doesn’t move down hard after earnings, we should see significant decay by the end of the week.
The DAL put spreads expire this week. Close them when you can. They are only worth about 0.03 and the short leg can be closed for 0.04. I’ll probably take them off Monday.
With ATVI moving steadily down throughout the week, these puts are moving further against us. Consistent with previous comments, we’ll take shares at this level. One way to look at selling puts is to Assume you’ll get the shares – if you aren’t comfortable with that, don’t sell the put!
5/9/2021 Update/Partial Close:
AXON had a pretty big move down in the last week that included earnings and is now down to a bit below 135. Our put spreads are still profitable and can be closed for about 0.15. They expire Next week on the 21st. Take them off to book the win or hold to try and squeeze a bit more premium. Don’t let it turn into a loser, though, so if the down trend continues/accelerates and they become worth more, just take it off.
The DAL put spreads expired worthless. I took them off as indicated in last week’s update for 0.03. Yet another winner for our members!
The ATVI put is now quite profitable after a big move up post earnings and a reduction in implied volatility. It is only worth 0.14 so you can book the big win or hold to try and capture the last $7/week.
Reach out with questions on this trade or anything else!
5/15/2021 Update:
The AXON put spread expires this week. Right now, it is showing it is only worth 0.05 at the mid-point (although it would probably take 0.15 or so to close). The short leg is about $13 OTM and is pretty low risk and likely to expire worthless. Close at your convenience. Do Not let this turn into a loser.
The ATVI put is worth about 0.15. Take it off at any time to capture the profit and book a win. Personally, I’m leaving it on to decay a bit more and will close on Friday or let it expire (taking on the risk of being assigned shares).
5/22/2021 Close:
The AXON put spreads expired worthless, bringing in $45/spread sold or a return of about 10% on our risk.
The ATVI put also expired worthless, brining in $90 of profit per put sold.
That closes out the trades from this week – all winners!
Reach out with questions on this trade or anything else!
