This week there was a nice Valentine's Day gift in the form of realised profit in Starbucks, but still no love from the Johnson & Johnson position.
$55 in Starbucks
Johnson & Johnson trade update
$55 in SBUX
On Feb 3, SBUX reported earnings and the market didn't really like what they had to say. I took the opportunity to sell 1x $97.50 cash-secured put expiring Mar 17 for $1.05. On Valentine's Day the trade was closed - locking in $55 or just about 50% of max profit.
This was actually a bit of a ‘controversial’ trade within my private community because I did bend one of my 10 steps to taking on the trade and immediately had questions coming in about why I took this trade, which I was happy to answer. To me this is super fulfilling because I know people are paying attention and not just blindly following what I do, which is never the intention. The idea is I update what's going on in my own portfolio for people to judge whether it's the right move for them to make for themselves. Nonetheless it was awesome to see a number of people making their own trades independently and locking in their profits as well.
Just a reminder that if you're somewhat familiar with options and want to receive my trade updates, there is a “Bread Crumb” subscription allows you to do so. There are quite a few Bread Crumbs currently signed up, and let's just say this SBUX trade alone covered the cost of their monthly subscription, and any other trades will be pure profit.
JNJ trade update
Following up from last week, still no love in the JNJ position. I sold a $160 cash-secured put expiring Feb 24 for $0.92 (circle 3), and it's currently trading at $1.19 (circle 2) for a $27 unrealised loss.
Last week I outlined a few possible actions to take on the trade, but none of those conditions were hit. This is what I refer to as a floundering trade where it's not quite in trouble enough to roll, but it's also not profitable enough to close. I think especially for new option sellers this can be pretty nervy because you know you're in that danger zone where early assignment begins to be a real risk. The important thing is not to panic and close the trade or roll it too early. Instead we just need to have some patience and wait for some clarity and see which way it swings. With 6 days to expiration, this trade is going to be dealt with one way or another by next Friday. I'll update what happens next week.
That's it for this week. We have a quiet couple of weeks until Mar 3 when non-farm payrolls come out so I'm not sure where the catalyst for any volatility will come from. I'm still trying to stay conservative because I don't want to be caught with too many positions on if/when volatility does spike and inflate premiums across the board.
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.