8/21/2021 Plan:
This week we look at Starbucks (Ticker: SBUX)
8/21/2021 Plan (continued):
- SBUX- Sell the Sept 24th 109/104 put spread for 0.51
- RKT – Sell the Sept 17th 14.89 put for 0.19 OR
- RKT – Sell the Sept 17th 15.89 put for 0.33
- Prices are as of market close 8/20/2021, 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
8/21/2021 Commentary:
Starbucks has not faired too well since earnings and is off quite a bit. I’m actually looking to get long shares in the name, but in case it decides to drop straight through support I’m protecting it with a 104 put. The options remain pretty expensive compared to realized volatility.
We’re closing our old RKT puts and re-entering again a few weeks out. Those strikes are correct – 14.89 or 15.89. Back in March, RKT had a special dividend of 1.11 and that reduced the strikes of the options that were available at the time. Confused by that? Reach out and I’d be happy to explain why it happened and where you can go to learn more about corporate events and their impact on option strikes. Yep, that’s a boring topic, but it is good to understand. You can choose which put(s) you want to sell based on how much premium you’d like vs. the risk of being assigned and taking shares. I’m probably selling the 15.89.
Feel free to Reach out with questions on this or anything else!
8/23/2021 Entry:
Market up well overall. RKT puts not available. Went 1 week further on SBUX. Sold Oct 1 109/104 put spreads for 0.48
8/28/2021 Update:
The SBUX put spreads are effectively flat after the first week. No change planned for this week as we look to let theta do its job.
9/4/2021 Update:
The SBUX put spreads are down to about 0.25 or so. A nice profit so far, but I will hold longer to try and capture more premium. We still have a few weeks and these are fairly far out of the money.
9/11/2021 Update:
The SBUX puts are down to only 0.05 at the midpoint, but I expect we would have to pay a bit more to close (wide spreads currently shown). Either way, a nice win on the books and it can be closed early now if you need the capital for other trades. With about 3 weeks left, I will probably try to close it cheaply for 0.05-0.10. As we are $10 OTM, people can leave it on, but it is a long time to wait for just a few more dollars of premium.
9/19/2021 Update:
For those that closed SBUX per the notes last week (for ~0.10), enjoy the win! If you left it on, the trade is still profitable but less so after the sell-off in SBUX on Wednesday. If you are concerned of it continuing to fall, you can simply close and book a smaller win. We have two weeks until expiration and over $4 of room until our short put. One can leave it on and follow traditional trade management to try and capture more decay.
9/27/2021 Update/Close:
A couple weeks ago (9/11) I suggested taking this off cheaply if possible. At the time, I put on a GTC (good to cancelled) order to close the put spreads for 0.05. It closed today. Feel free to do the same or try to ride out the last few cents this week. If SBUX starts moving in the wrong direction, just take the win and move on.
