Our KB Home (KBH) call expired worthless last week. I am recommending a new call to sell against our uncovered shares to reduce our cost basis on the position.
If you do not currently own shares of KBH and want to enter this position, you must first buy 100 shares for every call you plan to sell to make sure your position is covered. And note that we will be tracking and managing this as an ongoing position.
Our Lululemon Athletica (LULU) and Peloton Interactive (PTON) put spreads also expired worthless on Friday. I am recommending we initiate new spreads today to reduce our net debits on those positions.
You can enter today’s spreads even if you were not in the previous trades. Just be aware that we will be tracking them as ongoing positions.
If you are new to spread trading, please watch my Bull Put Spread Coaching Session before entering the trades.
KBH Uncovered Shares
Current Stock Price: $43.34
Cost Basis: $47.53
Action: Sell to open the KBH Jun Monthly (6/18) 47 Call for around $0.50
New Cost Basis: $47.03
Current Stock Price: $318.14
Net Debit: $4.40
- Sell to open the LULU May Week Four (5/28) 310 Put for around $1.20
- Buy to open the LULU May Week Four (5/28) 300 Put for around $0.35
- Set initial credit limit at $0.85
New Net Debit: $3.55
Current Stock Price: $99.37
Net Debit: $7.50
- Sell to open the PTON Jun Week One (6/4) 90 Put for around $1.01
- Buy to open the PTON Jun Week One (6/4) 85 Put for around $0.50
- Set initial credit limit at $0.51
New Net Debit: $6.99