The premium on our Starbucks (SBUX) spread has fallen to a nickel. Let’s book profits now rather than tie up the capital for another week. By doing so, we’ll earn a 6.4% return in three days, or 779% annualized.
Current Stock Price: $89.03
Cash in Hand: $0.21
Action:
- Buy to close the SBUX Sep Monthly (9/16) 77.50 Put for around $0.11
- Sell to close the SBUX Sep Monthly (9/16) 75 Put for around $0.06
- Set initial debit limit at $0.05, but adjust as needed to close today
Profit: $0.16, or $16 per spread