top of page
  • Writer's picturethemoneyloaf

$105 profit in ABBV

Happy weekend!

It had to happen some time! I finally got my first early assignment of 2024.

In my course, I teach this as the “worst case scenario”, but it also means I'm always ready for this scenario and have a plan to get out. Read on for more details.

This week:


  1. $105 profit in Abbvie (ABBV)

  2. Early assignment in Starbucks (SBUX)


 

$105 profit in ABBV


Back on 26 Apr, ABBV reported earnings and the market didn't like what they had to say, sending the stock down from roughly $167 to $160.

I took advantage of this volatility and sold the $155 cash-secured put in ABBV expiring Jun 21 for $185 in premium.

Not too long after, ABBV rebounded and I was able to buy back my position for $80, which means I locked in realized profits of $105, or roughly 57% of max profit.

abbv-selling-option-profits

Between this $105 profit and the $87 profit in JNJ last week, the running realized profit for the month of May is $192, just from 2 trades.

If you're somewhat familiar with options, you can join my private community and get updates to my trade entries and exits (not recommendations!).

It costs $49 a month meaning the returns for May would nearly be 4x the subscription cost from these 2 trades alone.



 

Early assignment in SBUX


It's not all good news though - I finally got my first early assignment of 2024.

Way back in March I sold a $90 cash-secured put in SBUX - which means I'm promising to buy 100 shares of SBUX by a certain date, if SBUX is trading below $90.

I managed to roll the trade a couple of times to stave off getting assigned initially, but finally in May, SBUX got sent down all the way to $75 after earnings (check out the diagram below), and I got assigned 100 shares at $90 per share.


sbux-stock-chart

For people trading options for the first time, getting assigned is scary.

But if you've been following me for a while, you know there's always a plan to get out of these situations.

Just like how I could define my buying price at $90, I can also define my selling price by selling a covered call.

At the moment, the $90 covered call is only going for $0.30, so the juice isn't worth the squeeze. I'll wait for SBUX to rally higher before selling the covered call, and in the meantime I'll also enjoy the dividend payouts of $57 per quarter (for 100 shares).

If you'd like to read about a previous assignment, last year I got assigned JNJ and ended up getting out of the trade with $914 in realized profit.

You can read about that at the link below.



 

Closing thoughts & useful links


Interestingly, unlike last quarter, NVDA's earnings was not met with widespread euphoria and a market rally. In fact on Thursday, the market looked really jittery before getting a grip on Friday.

At the moment, we just don't have a strong catalyst to move stocks one way or another. Inflation and the fed seem to be stuck in a stalemate and earnings season doesn't start for another 6 weeks.

This makes risk management more important than ever. April and May were slightly volatile months. I want my portfolio to be positioned properly in case the next few months are even more volatile.

Have a good weekend!


 

This article is for educational purposes only. This is my own portfolio which is being managed according to my goals and risk tolerance. Your situation is likely different and you should do your own due diligence before investing in stocks or options.

bottom of page