Yesterday I sold the MSFT Jun 21 115-105 Put Spread for .75 Credit. Today with MSFT at 122.47 +2.43, the spread is trading at .52. The risk or Margin on the trade is $925. We are trying to make 6% of the Margin or Risk, $55. For a Profit, I will have an order in to close for an .20 Debit. If MSFT goes back down, I would exit the trade if the spread exceeds 1.70. I can link both orders with an OCO .MSFT Cash Secured Put Alternative ( Put Credit Spread)
With WMT around 98.75 , I bought 1 Jan 11 94 Call and Sold 1 Dec 14 98 Call for a 3.91 Debit. Looking to make around 10% on this trade, so I would sell out for 4.30 Credit. If the spread trades under $3.50, a loss of 10%, would get out.
Do I love AAPL at these prices? No! Does it feel like trying to catch falling knives and trying to pick a spot where AAPL will bounce? Yes! I am taking a short term contrarian position with a put credit spread in AAPL. Do I think this is the best candidate out their ? No! I like the price charts better in the following stocks for Cash Secured Puts: CMG, MCD, UNH, ULTA, VMW, AZO, CI, CME, AAP, NEE, CLX, ANTM, and others. Looked at Put credit spread earlier in AZO, but liquidity stinks! Easier to go to AAPL and it’s great liquidity , than sort through other less liquid candidates with much nicer bullish price charts. Back to AAPL and my purely short term contrarian play. The Trade is B 1 Dec 7 155 P and Sell 1 Dec 7 165 P for 1.39 Credit, AAPL was at 172.35 . The risk is $861. Right after I did the trade, AAPL dropped to 171 area and the spread was trading at 1.64! As Charlie Brown would say, Ugh!Now at 12:30 central, stock has come back to 171.90 -.39 and the spread is trading around 1.42. Bottom line, AAPL still very toxic and volatile now and not for the faint of heart. This also is an 11 Day Trade, Dec 7 expiration. My Plan is to buy the spread back for .80, I sold for 1.39 credit, that would be a 7% return on my $861 Capital. If AAPL continues down , would exit trade if the spread hit 2.25. That would be a loss of 10% on my capital of $861.
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Blog Update on AAPL Put Credit Spread 11/28/2018
Monday, Nov 26, Sold AAPL Put credit Spread when AAPL was around 172.50, the Dec 7 155/165 Puts for 1.39 Credit, bought it back today with AAPL at 176.35 for .63 Debit. Capital and Risk was $861. We made $76 on $861 or 8.8% return in 2 days for every 1 contract.
Around 11:30 central today, AAPL was at 199.66 -7.82 for the day. Friday was down pretty good also because of earnings. Today, I took a neutral to Bullish long term stance with AAPL and did a put credit spread instead of a very expensive cash secured put ( simply a short put). I sold the Nov 23 190 Puts and didn’t like the high margins of a short put, so I bought a 180 Put against it. I did the credit spread for 1.60 credit. A little less than 3 hours later, I bought back the spread for 1.16 Debit with AAPL near 201.5 at 2:17 pm central, a return of over 5%. My plan was to take 10%, that would mean buying back the spread for .80 Debit. But my impulsiveness had a hard time turning down over 5% in less than 3 hours!