I am recommending we roll our Bank of America (BAC) put to a higher strike price for this week, taking advantage of expectations of higher interest rates and greater bank profits. The income we generate will turn our net debit into cash in hand.
If the new put expires worthless, we will book a small but real profit, once again proving the worth of patience and an active recovery strategy.
Current Stock Price: $43.12
Net Debit: $0.09
- Buy to close the BAC Oct Week One (10/1) 41 Put for around $0.09
- Sell to open the BAC Oct Week One (10/1) 42.50 Put for around $0.23
- Set initial credit limit at $0.14, but adjust as needed to roll today
New Cash on Hand: $0.05
Expiration: After the close on Friday, Oct. 1
Potential Rate of Return: 0.1% in 116 days, or 0.4% annualized, if this option expires worthless