8/27/2022 Plan:
This week we look at Medtronic (Ticker: MDT)
8/27/2022 Plan (continued):
- MDT- sell the Sept 23 85/80 put spread for 0.57 OR
- MDT – sell the October 21 80/75 put spread for 0.49
- CCI – Sell the Sept 16 160/155 put spread for 0.45 or more – Note the market will need to sell off more for this to be available.
- ABBV – Sell the Sept 30 125/120 put spread for 0.45 or more – Note the market may need to sell off more for this to be available.
- Prices are as of market close 8/26/2022, 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
8/27/2022 Commentary:
A few put spread ideas this week, all with the theme that the market may go down further, but not Too much.
Two choices with MDT – one sooner and for more premium, one longer and for less. The reason the October trade has less is that we’ve selected lower strikes. I’m leaning towards the former trade, personally. For those unfamiliar with Medtronic, they make medical devices. It bottomed earlier this year above 86 and this spread is intentionally below that level.
We look to re-open trades in CCI and ABBV similar to past weeks. I think we’d have to see dips in both of these names to get a fill, although the ABBV is close. One could definitely re-enter the 130/125 put spread in ABBV for a 0.60+ credit. I’ll alert if I do take that. It is a bit too near term for my tastes as we sold off big on Friday and if that continues Monday, this could be against us pretty quickly.
Feel free to Reach out with questions on this or anything else!
8/29/2022 Entry:
Sold ABBV Sept 16 130/125 put spreads for 0.52.
Sold MDT Sept 23 85/80 put spreads for 0.62
9/5/2022 Update:
The ABBV put spreads can be closed for 0.44, meaning we’ve made about $8 in 1 week on the trade. Not a lot, but better than a loss. With two weeks to go until expiration, I plan to leave them on at least through this week.
The MDT put spreads moved against us. We have three weeks left on this trade and I intend to hold. If MDT dips below the short strike of 85, I will re-assess. It established a new low last week of 86.42, not a great sign, so watch it closely and cut bait if the loss becomes too large for you.
9/10/2022 Update:
The ABBV put spreads are worth 0.04 and can be closed at anytime this week – reminder of Friday’s expiration. With ABBV above 141, they have more than $11 between the current stock price and the short strike.
The MDT put spreads have recovered quite nicely and are now worth about 0.08 for a tidy profit if we close them now. With two weeks to go, no harm in taking them off and looking for another trade. I may take them off for 0.05 or 0.06 if I can.
9/18/2022 Update/Partial Close:
The ABBV put spreads expired worthless, which means $52/profit per put spread sold. Nice. Despite the huge moves in the market, these were never really in danger.
The MDT put spreads expire this week and are currently $5 out of the money. The spreads are wide, but they could probably be taken off for 0.20 or so. Book the profit any time this week – I’ll likely hold until Thursday or Friday unless I can take them off for about 0.05 earlier in the week.
9/24/2022 Update/Close/Roll:
Tough week in the market with a huge Fed related selloff and more downward movement throughout the week. That put the MDT put spreads into a loss if you didn’t take them off a couple weeks ago as the update suggested. We had a few options on Friday. Close for a loss, roll to a new expiration for either a small loss or a small credit, roll Just the short puts if we want to take delivery of the stock and pull in a bigger credit. Personally I did the last as I’d add shares in this area. If you wanted to extend, but not take shares, go with the put spread. If you have lost faith in MDT, just take the loss and move on. $172/spread in loss on this one and we’ll monitor the trade moving forward.
10/9/2022 Roll:
The MDT puts we sold expired last week – they could be closed for a profit of $139 per put sold. I closed them and re-opened (rolled) a few weeks out at a lower strike – 84 – and taking in an additional credit of $57 per put sold and adding 3 weeks to the trade (10/28/2022) expiration. This adds credit, reduces total risk, but does add three weeks to the trade. One could also simply take the win (offsetting the previous put spread loss) and move on.
10/16/2022 Update:
If you didn’t simply close out of the MDT trade, we’re down about $35 per put currently. With two weeks to expiration, I’m holding my puts.
10/23/2022 Update:
MDT had a nice move up last week and we’re profitable on the puts by almost $130 each. They expire this week and with MDT trading above $83, we can close and take the profit or roll for more time and potentially more credit. If MDT is above 84 at expiration, they will expire worthless maximizing the profit on the trade. Certainly the latter is the best outcome. If MDT is about where it is today, I’ll likely roll and try to reduce the strike as well. For example, the puts could be rolled now (if the market was open) to 83 2 weeks out (Nov 11 expiration) And take in a $51 credit per put.
10/30/2022 Close:
With MDT ending the week at 86.82, our 84 puts expired worthless, bringing in $293 of profit per put sold. This approach works well on solid companies, but keep in mind that once solid companies can go through long downturns and potentially never recover. The cash behind the puts is at risk.
