The chip sector continues to advance, and our Micron Technology (MU) call is deep in the money. I am recommending we roll it out to the December monthly expiration and up to a higher strike price to avoid being called out of shares. While we will need to spend some cash to do so, we will pick up an additional $7 in potential capital appreciation.
I am also recommending we roll our SPDR S&P Biotech ETF (XBI) put out two weeks and to a higher strike price to generate more income and reduce our net debit on the position.
You can enter the second leg of today’s XBI trade even if you were not in the previous one. Just be aware that we will be managing and tracking it based on the ongoing position.
MU Nov Monthly (11/18) 58 Call
Current Stock Price: $63.84
Cost Basis: $64.17/$67.62
- Buy to close the MU Nov Monthly (11/18) 58 Call for around $5.93
- Sell to open the MU Dec Monthly (12/16) 65 Call for around $2.86
- Set initial debit limit at $3.07, but adjust as needed to roll today
New Cost Basis: $67.24/$70.69
XBI Nov Monthly (11/18) 77.50 Put
Current Stock Price: $84.18
Net Debit: $4.41
- Buy to close the XBI Nov Monthly (11/18) 77.50 Put for around $0.08
- Sell to open the XBI Dec Week One (12/2) 80 Put for around $1.32
- Set initial credit limit at $1.24, but adjust as needed to roll today
New Net Debit: $3.17