Selling January 50/45 Put credit spreads for .70 , normally risk would be $4.30 but I will take profit on the 45 long put if we plunge and roll the short 50 put out in time (not down) and possibly just take assignment and write calls (depends on the premiums) Already reduced basis in this name and continue to like the company but not the price .............of all equities. I could get stuck between strikes, so I will look to leg this trade quickly if sellside continues for the rest of the week.
Comment:
Tempted to leg out of this trade already today with a good sized sell off, but the premium was not there? I can only hope for another good $4-$5 dollar drop tomorrow and I will definitely sell the long 45 put and manage the 50 (roll out first most likely)
Comment:
The market keeps selling off but premium in the options does not seem to react properly. I.V.R. has gone up by 11 and the price of TDOC has dropped $9 but the 45 short put has not moved much (seems no liquidity in these sell offs) I sold the 45 long put leg of this put credit spread today for 1.30 which leaves the short 50 puts (I think these are easier to manage) I did not really gain much by doing this as the 50s are now selling for 2.60 and I only collected 2.00 but I can still roll this and there was no telling if the market would continue to sell off 800pts every day for all I knew and the 50s were selling for 1.55 when I placed this trade so.......hindsight.
Comment:
Should have been more patient today but even if I had waited for the flush would have only gotten me .40 more I bought back the 50 short put in Jan for 3.40 and sold the same 50 puts in April for 6.50 Next I will look to purchase some put debit spreads on the next bounce to collar this trade and cut off some of the downside risk
Comment:
I had pondered putting a trade to cut the risk in another account due to the fact that I can not be cross strikes but with a small rally today I decided on just one wider put debit spread to collar the two short puts I have rolled out rather quickly. I have well over 6.00 in total cost basis reduction (will have to crunch numbers and repost) I am not afraid of being long TDOC but the options have become inefficient lately at predicting outlier moves and I have no negative delta trades other than short calls from covered positions. I bought an in/out spread 55/45 out until April for 4.50 with a POP of 51% I am willing to give up some of my winnings in an effort to get a better price on this growth stock with a good story but little in earnings or cash flow. If the stock rallies I am still up but if it drops I am long 2 lots with better basis...... which is what I want.
Comment:
Well this thing has gotten away from me a bit, as the market got a little crazy for a while. I sold the first collar 55/45 put debit spread for only a 1.10 gain. I then also quickly (probably too quickly) rolled from April to December buying the two 50 strike puts back for 10.60 and selling the December 50s for 14.10 Things have settled down a bit but I also purchased another single put debit spread for protection.... a 40/30 for 3.70 debit. Volatility did not collapse much for a time and time value was all I could really collect. So as the position sits now I have collected a total of 9.50 should this expire worthless but I have purchased insurance of the 40/30 vertical (only one) and the initial loss from the first roll I have 4.60 that has been given back. December seems a long way away and I can scratch this trade right here but I would have wasted some effort and I still like the name, so I am going to let the market show me what to do.
Comment:
Forgot to mention the 40/30 put vertical is only protection until July..... and the reason I purchased the protection was I did not want to continue to take pain as the stock continued to drop and had to hedge a little (underhedged as it was) so I could make money if the name continued to plunge......or lose less, however you want to look at it.
Trade closed manually:
Bought back the 2 short puts in December for 4.35 today......leaves me with only 1.45 profit and a free long put vertical out until July. Seems unlikely to get there but with earnings on February 27 any down move will be profit and the market may turn with earnings guiding down for a lot of companies.
Trade active:
Sold 3 short puts in July at the 45 strike for 1.30 each and still have the long 40/30 put vertical from the trade above as limited protection. Earnings miss but with VIX seeming to collapse overall I don't mind getting assigned this stock at a discount so I am back in the trade.