This week we have:
1) A double dip opportunity in JNJ
2) Trade update: SBUX & WBA
Let’s go!
Double dipping in Johnson & Johnson
In last week’s newsletter I said I had an order in to close my JNJ position for $0.20.
That order got hit first thing on Monday (Circle 1) when the market opened, and I was out of the trade with a net profit of $125.
On Tuesday, the Consumer Price Index (CPI), which is a measure of inflation, came out higher than expected, and the whole market saw red for the day. (Circle 2)
I took advantage of the situation to sell a new put in JNJ and collected another $125 in premium upfront.
After the market decided to shrug off the CPI numbers, JNJ rallied all the way till Friday (Circle 3), where I was able to pay $55 to close the trade.
That’s a realised profit of $70 ($125 - $55), or 56% of max profit in 4 days.
Overall a great trading month for JNJ - this a screenshot from Tastyworks showing my trades and the correspondng circles matching up to the stock chart above.
I’ve collected a total of $1,384 from JNJ alone this year just repeatedly selling cash-secured puts hoping to get assigned 100 shares of JNJ stock.
Still no luck on that front, I’ll be looking to initiate a new position the next chance I get
Trade updates: Starbucks & Walgreens
Not a lot has changed significantly from last week.
If you’re new, Circle 1 is the trade details, in the case of SBUX I sold a put at the $77.50 strike expiring on 21 October.
I collected $1.76 in premium (Circle 3), and it’s currently worth $0.47 (Circle 2)
This means I’m sitting on about 73% of max profit right now, which is well within my target zone. I have an order working to close this position at $0.40.
We have the opposite situation in WBA where I sold the $35 put for $1.12, but it’s currently trading at $1.38 for a $26 unrealised loss overall.
Even though WBA is in the money (and technically a losing position), we have enough time in this trade with 19 days to go to defer any action for another week.
With more time for the stock to move, it should either turn profitable, or drop so deep in the money that it’s time to consider rolling or taking assignment of shares.
Either way that gives me a much clearer direction on what to do, we’ll see how this plays out next week.
You can read about my initial thought process behind establishing these positions in Starbucks and Walgreens below.
I just wanna end off by once again saying thanks for your support.
Although I’ve benefited from this newsletter because people have signed up for my course, honestly the biggest win for me is the number of emails or DMs I get from people saying they never realised options could be used to build a portfolio, because most people think of options as gambling.
I’m here to dispell this myth and demystify selling options one newsletter at a time.
Ultimately my hope is that more people realise they don’t just have to buy stocks or ETFs and hold them to make money.
They can use options to generate cashflow before, during and after buying and holding stock as well. I don’t care if they learn this from me or somebody else, what’s important is they are empowered to improve their financial lives.
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.