Take profit now and leverage for the next round
I had successfully predicted the trends. See
I don't know if the pattern will be the same this season but there is no reason it will not. Therefore, here is my strategy for this season after it hit my target.
- I exited 80% of my holding of this company stock to take profit.
- I used the (costless) collar option strategy to protect my shares (April, $26/$29 Put Debit Spread, sell $34 Call, credit $0.05).
- I bet on the big drop before the end of March so I bought 4/14, $30/$25 Bear Put Spread for $2.00 debit per spread. I hope this bet makes at least $100 if it drops to $26 by end of March.
Trade active:
I sold my bear put spreads this morning for $2.90 per spread. I closed the trade because it reached my target, $26. The gain is 45% of the entry cost. There is a chance it dips to $22 but it's unlikely. Therefore, I used the profit I earned today to cover (partially) the 5/20 $22 short put margin. I sold a total of two 5/20 short puts for the credit of $1.2 per contract. I actually hope it could briefly touch $24 in the near future although that's not likely as well. I will start to buy shares if it goes below $24. I set a larger trade for limit buy at $20.88. I am hoping to accumulate 1000 shares with an average price around $22 or lower.
Trade active:
My cash-secured PUTa reached my set limited profit today so I closed them right before the market close. The profit is $70 per contract. It's not much but I've established a pretty good foundation for future trades. I am seeing the reversal in the next few days as the Vol shirks recently. The pattern is very similar to last Otc. I sincerely hope it will drop to below $26 again by mid-April so I can buy them back. I think we will see $34 by the next ER.
Comment:
The recent move is phenomenal. I was speechless when seeing the price going down to $26 and then coming back on 3/29. Despite that everyone predicts it can go higher, I think the timing of getting on board is coming. It looks like my 4/22 collar has a pretty good chance of being effective now. If I am lucky to cash out for $29 without buying in $26, I will sell 6/17 Puts ($25-$27) so I may be buying shares on average approx. $24. I am still thinking it will be $30+ by the next ER.
Comment:
Well...my collar didn't work and that's actually pretty cool. My only regrate is that I sold too few put on the day it dropped to $25.XX. So now what? I am thinking sold all my position for around $32 because the variation is too much to predict the move. It's going to break the pattern anyway. Thus, I sold May $32 covered call for $1.4. If the stock price dropped below $29, I will sell all my position and buy the covered call back.
Trade closed: target reached:
The covered calls I sold previously weren't called away. I was lucky and collected the premium of $1400. Then I closed all my positions last week at $33.9. With an average cost of $25.5, I collected $8400 for profit. I earned more than $10K with trades since the last ER. What an incredible journey in such a bearish market.
