XLP vertical spread = We increased it to 5 contracts of the Feb 50/48 put vertical and during the market drop, we added another contract at 49/47. The entire 6 contract position is now right at break-even with 28 days to expiration. It looks to be perfectly positioned. Margin required is $1200 in an IRA at ThinkOrSwim.
WMT = Our trade string since Jan 1 is now up $145. We are short three 61.5 puts expiring today (we will let them expire) and short three 63 puts expiring in one week. The time decay for next week’s contracts is $15/day. We plan to manage this next week and will let market conditions dictate our action at that time.
XRT = We rolled this covered call forward to the Feb 16 expiration. It was showing very good relative strength during one of last week’s high volatility days, so we used it to generate our daily cash flow. It expires in two weeks and has $33/day of time decay. Our XRT trade string has lost about $250 per contract, or $2.50 a share. Not our desired result, but some things don’t work out and we always have a plan for that. This has become an ongoing cash flow position that will last for months. We don’t plan to do anything next week, and will wait for the expiration week (Feb 16) to adjust.
We will end this week UP about 1.5% in our trading account. High volatility raises option prices so we have no shortage of opportunities at this time. We have used our strategic plan to avoid being whipsawed out of positions. Our account is down about 3% for the year. The cash level is about 30%, calculated as if all short puts were assigned.
All in all, a good week.
Stay optioned (and disciplined), My Friends!