4/3/2022 Plan:
This week we look at Chewy (Ticker: CHWY)
4/3/2022 Plan (continued):
- CHWY – Sell Apr 22 35/30 put spreads for 0.47 OR
- CHWY – Sell Apr 29 35/30 put spreads for 0.63
- SBUX – Sell Apr 29 85 put for 0.70
- Prices are as of market close 4/1/2022, 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
4/3/2022 Commentary:
We look at CHWY this week. It is like the Amazon of pet supplies (always a catchy thing to say). Ironically Pets.com which was the equivalent of “jumping the shark” back in the dot com bust failed miserably and now CHWY is wildly successful. Mixed a LOT of metaphors there. Sorry.
Anyway, this trade assumes that we can hold the recent low of 35 and we’ll profit nicely if we do over the next several weeks.
I still like Starbucks – the coffee and the stock. This trade gets us in at an equivalent of 84.30. You can also spread it as a trade if you’d prefer. I’ve been trying to get long the shares and will simply sell the put cash secured.
Feel free to Reach out with questions on this or anything else!
4/4/2022 Entry:
CHWY up big, no trade on it. Sold SBUX Apr 29 82 put for 0.86. Can spread as a trade with 80 or 75 put.
4/10/2022 Update:
Big drop in SBUX (and the market) after I sold a put on Monday. This trade has a few weeks to play out and if SBUX doesn’t recover, I’ll have shares at the 82 level or will roll-down and out.
4/17/2022 Update:
Not much to update since last week on SBUX. We are still going to be assigned/need to roll if SBUX doesn’t recover in the next two weeks. I’ll cover those options next week.
4/23/2022 Update:
The market has continued to move down and SBUX has gone along with it. Absent a big recovery, we will take shares of SBUX at the 82 level and sell calls against it.
4/29/2022 Update:
With high implied volatility, I rolled the SBUX put from 82 to 81 to decrease overall exposure and pull in a small credit of 0.32. This is an initial loss on the put we sold with a chance to make it all back on an SBUX recovery. We’ll likely take shares if SBUX remains below 81 by the May 20 expiration (3 weeks)
5/7/2022 Update:
Despite a very rough week for the market overall, SBUX did move up. Great move after earnings, but unfortunately dragged back down with the market. We’re profitable on the current put by $146 and I plan to hold to expiration. As discussed last week, we may take the shares or roll if SBUX doesn’t get back up above 81.
5/14/2022 Update:
We will likely take ownership of SBUX shares absent a major rally. We -may- be able to roll for a credit, we’ll find out at the end of the week!
5/22/2022 Update:
I ended up rolling out SBUX to Jun 24, taking in an additional 0.42. A pretty small credit, but I think SBUX has been beaten down a bit and may recover given a bit longer. Time will tell!
5/29/2022 Update:
With a decent run-up in SBUX, the put is now profitable by $413. I intend to hold longer as we still have multiple weeks to expiration and plenty of extrinsic value in the put.
6/5/2022 Update:
Our put in SBUX has another 3 weeks to go and is profitable by nearly $600. As stated last week, we still have a good amount of extrinsic value and I intend to hold for another couple weeks at least.
6/11/2022 Update:
We still have another two weeks on the SBUX put and while it is still profitable, it has come off with last week’s sell off – now profitable by $361. No change planned for this week.
6/17/2022 Update:
With the large sell off in the market, SBUX also sold off and we are now just barely profitable on our short put. With expiration this week, we need to roll or take ownership of the shares (or get out for a small profit or small loss). I plan to roll if IV remains pumped, otherwise I will take the shares.
6/26/2022 Update:
I was assigned early on the SBUX put I sold. I’ll be turning around and selling the Jul 8 81 call for 0.76. Another option is the 82 call for 0.53 which provides a good return given the time plus potentially $100 in capital gains. This is one of the fun things about covered calls – you can trade a bit less yield for the opportunity to make more in capital gains depending on how bullish you are in the given time period.
7/10/2022 Update:
The call we sold for 0.90 expires this week. With SBUX at 79.26, it will need to move up for the shares to be called away. If not, we’ll pocket the $90 and try again next week.
7/17/2022 Update:
The SBUX call expired worthless adding $90 of profit to the account if you took no action. I actually closed for 0.02 when I re-sold a call Friday – 29 July 92 call for $1.02. What is nice is that we get a good return on our risk and if it goes out above 82 we get another $100 in capital gains (vs. the 81 we sold last time).
7/23/2022 Update:
The SBUX call expires this week and is currently in the money, which means we have a pretty good chance the shares are called away this week – which is our max profit situation. We’ll have captured two calls worth of premium plus $100 additional capital gains. If SBUX sells off and ends below 82, we’ll sell another call.
7/31/2022 Close:
SBUX closed at 84.78, which means our 100 shares were called away at $82. This was a big win as we gained $102 from the call we sold plus another $100 from the capital appreciation. Since the initial put was sold on April 4, we gained $450 on this series of SBUX trades. SBUX closed on April 4th at 88.09. If we have bought 100 shares then we’d be down $331. We placed a series of bullish option trades and are UP $450 in that same timeframe. That’s the power of options!
