I am recommending we roll our Bank of America (BAC) and General Motors (GM) puts. These are recovery positions, and the income we generate from rolling will reduce our net debits as we work our way toward breakeven.
BAC Sep Week Four (9/24) 41 Put
Current Stock Price: $41.43
Net Debit: $0.37
Action:
- Buy to close the BAC Sep Week Four (9/24) 41 Put for around $0.16
- Sell to open the BAC Oct Week One (10/1) 41 Put for around $0.44
- Set initial credit limit at $0.28, but adjust as needed to roll today
New Net Debit: $0.09
Expiration: After the close on Friday, Oct. 1
Potential Rate of Return: I am targeting breakeven for this position
GM Sep Week Four (9/24) 50 Put
Current Stock Price: $51.52
Net Debit: $4.79 (Note that the net debit was incorrectly listed as $4.69 in the previous alert.)
Action:
- Buy to close the GM Sep Week Four (9/24) 50 Put for around $0.07
- Sell to open the GM Oct Week One (10/1) 51 Put for around $0.69
- Set initial credit limit at $0.62, but adjust as needed to roll today
New Net Debit: $4.17
Expiration: After the close on Friday, Oct. 1
Potential Rate of Return: I am targeting breakeven for this position