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  • Writer's picturethemoneyloaf

New put ratio spread in Apple

Quick update this week in two positions:

  1. New put ratio spread in Apple

  2. Johnson & Johnson trade update


New put ratio spread in AAPL

A bit of a late update but I finally managed to put on a put ratio spread in this portfolio. I sold a $140/145 put ratio spread in AAPL expiring on Mar 31 for $0.55. Put ratios are one of my favourite trades to start a position because there's so much flexibility in managing them, as you'll read after the screenshot below.

You can see from the screenshot that the trade was put on for $0.55 and the P/L open (which is profit and loss from the time the trade was opened) also reads $0.55. This means I'm currently sitting on a 100% profit on this trade. So why is this trade still here instead of being taken off at the usual 50% of max profit? The interesting thing about put ratio spreads is they actually have the potential to make even more profit than the original credit - which is what I'm going for here. If AAPL continues on this upward trajectory that's great, I'll take the 100% profit. If it heads back down all the way to $140, there's another potential $500 of profit to be made. It does require some alignment of stars, but it can (and has) happened.


JNJ trade update

Unfortunately things are not quite as postive in the JNJ position and the stock continued to drop this week. My overall net credit on the roll is $233 and the put is currently trading for $625, so that's an unrealised loss of $392.

This is the critical point where a lot of new option sellers get shaken out of their trades.

They think holy crap I'm down nearly $400 on this trade, I should just close it and get out before it gets worse.

This is why stock selection is absolutely critical to begin with.

Mentally, trades are won or lost at the point where you envision yourself getting assigned 100 shares, and those shares dropping another 50% from that price.

Many people new to option selling get lured in by the high premiums of meme stocks without considering the larger picture and risk to their overall portfolio and capital - that's why they panic and sell out of positions.

For me, JNJ was the first stock I bought back in 2010 when it was trading at $60+, I am totally unfazed by the possibility of owning more shares in 2023.


So I was looking forward to non-farm payrolls last week but apparently it got pushed back a week because February is a short month and they need more time to package the data. So one more week of waiting for some volatility!


This newsletter 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.

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