1/2/2022 Plan:
This week we look at Rocket Companies, Inc. (Ticker: RKT)
1/2/2022 Plan (continued):
- RKT – Sell Jan 28 13 put for 0.30
- Prices are as of market close 12/31/2021, 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
1/2/2022 Commentary:
We return to Rocket (Ticker: RKT) after closing out a put last week for a nice profit. This time, I’m going almost a month to capture about 2.5% on on our risk. I’ll take shares if assigned (or roll) and you should too if you place this trade. Otherwise, look for a spread. I’m going to be pretty flexible on the strike (13.5 or lower) and timing – 3-5 weeks out – and you can too.
While Not a recommendation, I am planning to sell a few AMD Jan 21 128/125 put spreads. I don’t love the volatility setup in this, which keeps it from an ‘official’ recommendation.
I’m also looking at many put sales – ATVI, XLNX, GM – feel free to reach out if you have questions on those.
Feel free to Reach out with questions on this or anything else!
1/3/2022 Entry:
Sold Jan 28 13.5 puts in RKT for 0.28.
1/8/2022 Update:
We are currently down about 0.07 on or short puts in RKT. We still have a few weeks and I intend to hold these until expiration.
1/16/2022 Update:
RKT is trading at 13.42 and we’re down some with the price right near our short put. We have two weeks left and the plan remains to hold until expiration. At that point, I’ll either take the shares or roll depending on pricing. Certainly RKT may recover at which point these will expire worthless.
1/22/2022 Update:
RKT is trading at 12.92 and if it doesn’t move up beyond 13.50, we’ll take ownership of 100 shares. We can also look at potentially rolling the trade down. I would target the 13 strike and 2-4 weeks, but only for a credit. This would allow us to extend the trade, reduce risk (if we roll down the strike) and take in a bit more credit.
1/30/2022 Update:
Lots of different choices on how to handle a short put that goes in the money – close for a loss, take the shares, or roll. What I choose depends on my outlook on the stock, my cash balance, and the ability to roll for a credit. In this case, I remain bullish on the stock long term and I was able to roll down to a lower strike and receive a credit. Friday I closed the 13.5 put for 1.25 and sold the Feb 25 13 put for 1.29. That is a net credit of 0.04 ($4), but it also lowers the strike buy 0.50. We have therefore reduced our exposure on the trade by another $50. From a record keeping perspective, this is a Loss of $97, but we now can gain $129 if RKT expires above 13 in a few weeks. Not big dollar trades, but wanted to dive into puts a bit since it is a common question.
2/6/2022 Update:
We are down a bit on the RKT put that expires on the 25th. No planned action here as we have a few weeks to see if this recovers
2/13/2022 Update:
Not too much to update on the RKT put, we still have about 2 weeks to go and we are profitable so far ($13). We’ll continue to hold and ideally RKT continues to move up closer to our strike.
2/21/2022 Update:
With RKT trading at 12.54 as of this past Friday, we are profitable by $30 on our short put. I plan to hold it until close to this Friday to try and capture more decay. If we get a nice pop, then this will expire worthless. Otherwise I’ll choose between taking the shares and rolling the put. I *may* simply close it out for a profit if it close to the strike price.
2/27/2022 Update:
A few different ways to handle an ITM put as we have discussed previously. For the RKT put, on Friday, I decided to roll Down to the 12.5 strike and take in a 0.04 credit, with our new expiration March 18. Specifically, I bought the put for 0.87 and sold the new one for 0.91. As we sold this put initially for 1.29 and bought it back for 0.87 we made 0.42 ($42) on the trade. A winner and we have a shot to bring in More profit with the new put we sold.
3/5/2022 Update:
With RKT moving up a lot in the last week, this put is down to just 0.27 for a nice profit of 0.64 after just a week. This can be closed at any time. I’m personally planning to leave it open for the next two weeks until expiration.
3/13/2022 Update:
Not a great week for RKT with steady moves down, our put is now ITM. It expires this week and we are faced with the traditional choices – close (currently for a profit!), roll for an additional credit, or take shares. I’m planning to close if it is close to ATM at expiration, roll if it is near the money, or take shares if it is far ITM.
3/20/2022 Update:
I rolled RKT on Friday, closing the existing position for 0.48, which results in a $43 profit per put sold. I opened the new put as the April 8th, 10.99 strike for 0.56.
3/26/2022 Update:
No change this week to the RKT put. It expires on the 8th and I plan to hold it through expiration (with a roll as needed).
4/3/2022 Update:
The RKT put expires this week and we are quite close to the money. With RKT trading at 11.04 on Friday we will need to take an action by Friday or accept shares if RKT dips a bit more. I plan to go right to Friday and let it expire worthless or roll down/capture more credit if it is near the money Friday afternoon.
4/9/2022 Update:
Well…I rolled RKT again. I closed out the current put for 1.09 and opened up the May 13th 10.5 put for an additional $0.15 credit. That means we took in $15 and reduced our total exposure from $1099 to $1050 per put sold. This has been an interesting trade and hopefully educational. We started at the 13.5 strike meaning we had $1350 of exposure (ignoring the initial credit). We’ve brought that down $300 or 22%. In addition, we have taken in a net $49 of credits, which is about 4% against our current risk. We’re still in the trade though and have the previously mentioned downside risk. There have been Lots of ways to play this as we’ve discussed. Reach out with any questions.
4/17/2022 Update:
We are down a bit on the RKT put, but have plenty of time to go – no action planned for this week.
5/14/2022 Update:
I rolled the 10.5 put to Jun 10th, taking in another 0.07 credit. Not much of a credit and I could have just as easily taken assignment.
6/11/2022 Update:
We were assigned on the RKT put at 10.50. Totaling All of the credits, we have brought in $116, which means our effective entry is at 9.34
8/14/2022 Close:
I closed out of the RKT shares for 10.75 on Friday. If you still have them, close at any time or you can sell calls against it. We are well above our break even at 9.34, so this was a $141 winner. It took a over 7 months, but this is a pretty neat trade. We made over 10% on our initial risk of $1322. If we had just bought stock in RKT on 1/3 at 13.72, we’d be down almost 22%! Instead, we continued to reduce our risk by lowering the strike and collecting more credits. We had to hold for a bit while RKT (and the rest of the market) sold off, but came out a nice winner!
