Hello!
Updates this week:
$95 in Johnson & Johnson (JNJ)
New trade in Starbucks (SBUX)
$95 profit in JNJ
I shared the details of this trade in JNJ in last Sunday's newsletter, and this week it closed for a profit. I sold the $160 cash-secured put expiring Sep 15 for $145, and this week I closed that option for $50, which locks in a profit of $95 or about 65% of max profit. Total duration in the trade to make this $95 was 14 trading days.
In last week's newsletter I shared why I tend to close positions early at 50% profit, obviously I let this trade run a bit more than that to the 65% level. The reason for that is I'm very comfortable with owning JNJ if I do get assigned, we've seen what happened earlier in the year when an assignment turned to $914 in profit - so I'm not worried. The important thing is to always have an overall strategy or framework, and then tweak that according to your own comfort level across different market conditions and stocks. This was also trade #37 in my public portfolio where I share real time updates (not recommendations) to people in my Bread Crumb subscription. It costs $49 a month and this one trade would have paid for itself. Not even including the $47 in profit from CL last week and $122 from NKE and DKS the week before that.
New trade in SBUX
Inflated volatility was presenting some good opportunities to set up put ratio spreads, such as the one in SBUX below. I sold the $95/97.50 put ratio spread expiring Sep 15 for $43.
Note that the closing trade is for a credit, meaning I could potentially make more than the initial credit for this trade, instead of the usual situation of buying it back early. I also wanted to put this on as a real demo trade for people in my course and private community to practise putting on a put ratio spread and getting used to the various profit scenarios. Fingers crossed we make more than this initial credit! SBUX of course has been a regular feature in this newsletter, and in fact I just left another put to expire in the money within my personal long term portfolio so I could pick up 100 shares at a discount. For all my previous trades in SBUX, click on the link below.
There was lots of random news this week. Bankrupcy filings in China and Michael Burry's apparent bet against the market.
If there's one thing I've learnt that has made me a better options trader after 11 years of doing this, is that all this crap is noise. Ignore it - focus on the strategy and manage your positions intelligently.
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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.