Option Strategies: MU& TSLA
Hello eveyone! Today i want to share some option stratgeies with you!
1.
Went ahead and sold puts for this week. Will also still stick to the plan and sell for next week assuming this week's trade closes out in profit.
STO $Tesla Motors(TSLA)$ 235 strike puts, Sept 27 expiration
2.
Executed the $Micron Technology(MU)$ trade. Remember, this is a defined risk & capped profit trade.
- Bought 300 shares of MU at 95.34
- Bought an Oct 4 exp 95/80 put debit spread to hedge
- Sold the Dec 20 exp 110 covered calls to pay for the put hedge
3.
$Micron Technology(MU)$ for the win today! 🥳
Now the question becomes ... what do we do with the trade post earnings?
Here is the plan:
- Hold the 300 shares
- Hold the Dec 20 $110 covered call
- Buy to close the Oct 4 $80 put and roll it up to the $94 strike (same expiration) if there is still some premium "meat on the bone" at market open tomorrow
- For the Oct 4 $95 put, we could either sell to close the position and capture whatever remaining premium it has ... or ... keep it as a safety net just in case as a protective hedge against the rolled up $94 put
We bet that MU won't drop back down to the 95 level since the earnings results and guidance were good. Probably the better trade would be to close out the 95 put for whatever we can salvage and roll up the 80 put to the 94/95 strike to capture additional premium if possible.
Remember: the covered call paid for the put hedge, so its not like we are losing money on the puts in the grand scheme of things. What we are trying to do is salvage premium on the put hedge to add to the profit capture for the overall trade.
As for the covered call, we will see what MU does over the coming weeks/months. If it looks like its gonna rocket and be 20, 30, 40+ points away from 110 by December with no signs of coming back down around that strike, then we might roll it up-and-out to try and capture more profit. Wait-and-see approach for now.
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