2/13/2022 Plan:
This week we look at a homebuilder, Lennar (Ticker: LEN)
2/13/2022 Plan (continued):
- LEN – Sell Mar 4 85/80 put spread for 0.60
- CHWY – Sell Mar 18 40/35 put spread for 0.47
- DAL – Sell Mar 11 36 put for 0.39
- Prices are as of market close 2/11/2022, 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
2/13/2022 Commentary:
LEN has been all over the place recently – Very volatile and off significantly from its highs. The housing market overall remains hot with properties getting all cash offers, and often closing above asking price. This trade assumes LEN stays above its recent low 89.1. I think we’ll see IV start to come down a bit in the next week or two which will give the trade a nice tail wind. We’ll see!
CHWY has been moving higher (currently trading at 52.10) and this assumes we don’t drop back ~20% in the next month.
I remain a Delta fan when it comes to flying and like their stock more than most airlines. I would happily add shares at 36 and we’ll look to collect more than 1% on the risk in the next 4 weeks for the opportunity.
Feel free to Reach out with questions on this or anything else!
2/14/2022 Entry:
Sold LEN Mar 4 85/80 put spreads for 0.69. Sold CHWY Mar 25 40/35 put spreads for 0.47. Sold DAL Mar 18 36 put for 0.42.
2/21/2022 Update
Down a bit on the LEN put spreads, but w/ just 2 weeks to go, I plan to hold for now. LEN is trading at 89 vs our short 85 strike.
We are also down a bit on our CHWY put spreads. Similarly, no change planned for this week, but we’ll keep an eye on this one if the overall market continues to sell off significantly.
We are up some on the short DAL put, taking in about 20% of the potential profit. I like holding this one longer and will do so.
2/27/2022 Update
The LEN put spreads expire this week and are currently worth only 0.40, for a 0.29 profit per spread sold. I will plan to take these off towards the end of the week. Similar to the commentary on SBUX, no harm in booking the profit Early in the week to lower volatility in your account.
The CHWY Put spreads have about 4 weeks and are still down. I plan to hold for another couple weeks unless the short strike is breached at which point I may take the loss.
Our Delta puts are profitable by a few dollars, no action this week as we intend to let these become more profitable with the passage of time.
3/6/2022 Update
The LEN put spreads expired worthless, bringing in $69 of profit per put spread sold. A nice solid win.
We still have about 3 weeks left on the CHWY put spreads and are currently down some. Assuming CHWY stays at its current levels, these will turn from unprofitable to profitable, but with the volatility in the market it is Not a sure thing. No planned action this week, but I will assess towards the end.
The DAL puts are now in the money and we will take shares if assigned next week. No action yet, but next week we’ll consider taking assignment/rolling/closing.
3/13/2022 Update
Two more weeks on the CHWY put spreads and the stock is at 39.24, meaning we are down some on the spread. I plan to hold through the week assuming CHWY stays somewhat level. It can be closed out for a loss now if you want to reduce variance.
The DAL puts expire this week and we are likely to take ownership of shares. I will do so and then sell calls against the position at our strike level or higher. I may consider a roll as well depending on pricing later in the week.
3/20/2022 Update/Partial Close:
The CHWY put spreads are worth 0.32 and expire this week. The rally in the overall market helped this position and it can be closed at any time for a profit. Assuming the market stays flat/up, I will hold until later in the week trying to capture much of the remaining 0.32.
The DAL puts expired worthless, bringing in $42 of profit per put sold. Bit of a wild end to that position (a theme we’ll see again this week…), but a nice result nonetheless.
3/27/2022 Close:
The CHWY put spreads expired worthless adding $47 of profit per put spread sold. That closes out the trades that we opened on Valentine’s Day – $274 in profit for the trades entered that day.
