For Friday Aug 25 2017 my stock was PepsiCo (PEP). I was unable to get filled at the 30 cents I had wanted. On Mon Aug 28 2017 however I sold 5 of the $112 put strike for Sep 15 expiry for 35 cents. I plan to sell another 5 and then I will add 10 long puts to turn the trade in a credit put spread trade.
For Mon Aug 28 my choice was Microsoft Stock (MSFT).
I sold 5 of the Sept 15 expiry $70.50 put strike for 33 cents.
I sold 15 of the Sept 15 expiry $70 put strike for 24 cents.
I bought 20 of the Sep 15 expiry $65 put strike for 4 cents to turn the above into credit put spreads.
Tomorrow’s Trade for Tue Aug 29 2017 – XBI ETF
I would stay a bit cautious on Tuesday and see what, if any, are the responses to the North Korean missile. If the market is selling off heavy in the morning I would hold this trade into Wednesday.
Biotech stocks had a great move on Monday and the XBI ETF moved up as well, closing at $80.23. My naked put trades against this ETF have been excellent all year. Looking at the latest chart you can see the move higher on Monday. There are two support levels above the $70 valuation. These are $77 and $74.50.
XBI ETF to Aug 28 2017
Put Options Selling Tool Analysis
The Put Options Selling Tool Analysis for XBI shows the ETF is in an uptrend. Two strikes are suggested. $74 and $73.50 which are both below the two support levels above.
XBI Analysis
Naked Puts
The prime trade on Tuesday is with naked puts or covered calls as I want to be sure on the response to North Korea prior to committing too much capital.
There are any number of naked put trades for September in the XBI ETF.
I am planning two trades.
I plan to sell the $74.50 put strike for Sept 22 expiry if I can get 50 cents for it, which was Monday’s price.
For Sept 8 expiry I am planning on selling the $76 put strike if I can earn 57 cents.
I will be keeping these as naked puts.
Just about any expiry period in September looks good but I would not sell above the $76 valuation.
For a rescue I plan to use a simple roll-down.
Credit Put Spread
All of these trades could be turned into credit put spreads through buying the first available put strike that is offered for 5 cents or less.
Covered Calls
For the Tomorrow’s Trade Portfolio, the goal is always to buy shares, sell covered calls and be exercised out of the trade to lock in the profit. This makes the trade ideal for a retirement account that will not allow puts to be sold.
For this trade I would buy shares and sell the $77 call strike for Sept 8 expiry.
Naked Calls / Credit Call Spreads
With the ETF moving higher I would not sell naked calls or setup credit call spreads.
Stock Trade
At the present time I have no interest in buying shares of this ETF.
Thank you for not posting these trades to my Public Yahoo Forum. Any questions can be emailed directly to me at members@fullyinformed.com or you can create a new topic in the private members forum. Tomorrow’s Trade is not a recommendation or financial advice. It is an outline of a potential trade to show what is possible for investors to achieve through studying stocks and their actions. It is designed for those investors who want to learn how to set up trades and protect them once established.
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