Our Best Buy (BBY) and D.R. Horton (DHI) calls are deep in the money. Therefore, I am recommending we allow our shares to be called away. We will sell puts on the stocks soon to reduce our net debits on the positions.
Speaking of earnings, Western Digital (WDC) announced after the close yesterday. Revenue and earnings came in slightly above expectations, but the company provided disappointing profit guidance for the upcoming quarter. Perhaps the biggest issue was the lack of clarity from the management team. From the press release to the earnings call, they could not seem to provide firm answers on how long supply chain issues would impact the company.
WDC is down sharply today, and our call is on track to expire worthless. I want to see where shares settle before deciding whether to sell another call or take a loss.
BBY Oct Week Five (10/29) 112 Call
Current Stock Price: $122.84
Cost Basis: $114.69
Action: Allow shares to be called away
Net Debit: $2.69
DHI Oct Week Five (10/29) 85 Call
Current Stock Price: $89.81
Cost Basis: $85.93
Action: Allow shares to be called away
Net Debit: $0.93
WDC Oct Week Five (10/29) 58 Call
Current Stock Price: $52.96
Cost Basis: $57.17
Action: Watch call expire worthless