The market has been savaged by fears of inflation, recession and higher interest rates. Since the May inflation report was released one week ago, the S&P 500 is down nearly 9%.
Our First Solar (FSLR), Mosaic Company (MOS) and Micron Technology (MU) are deep underwater.
I am recommending we accept shares, as the math of selling calls simply makes more sense in the current market environment than continuing to roll the puts. Not only will we be able to collect cash, but we can capture potential appreciation when the market recovers.
The goal will be to generate a 0.5% cash return on these positions. However, I may accept a lower cash rate of return if I believe there is significant potential for short-term appreciation.
I will be discussing this strategy in greater detail during Tuesday’s Live Trading Session.
Note that our protective puts on these positions remain in place.
FSLR Jun Monthly (6/17) 71 Put
Note: No action is needed on the FSLR Jun Week Four (6/24) 60 Put at this time.
Current Stock Price: $66.66
Net Debit: $14.02
Action: Accept shares
Cost Basis: $85.02
MOS Jun Monthly (6/17) 59 Put
Note: No action is needed on the MOS Jun Week Four (6/24) 50 Put at this time.
Current Stock Price: $49.86
Net Debit: $6.51
Action: Accept shares
Cost Basis: $65.51
MU Jun Monthly (6/17) 70 Put
Note: No action is needed on the MU Jun Week Four (6/24) 53.50 Put at this time.
Current Stock Price: $55.44
Cash in Hand: $0.14
Action: Accept shares
Cost Basis: $69.86