I am recommending we roll our Bank of America (BAC) put out one week to generate more income and reduce our net debit on the position.
You can enter the second leg of the BAC 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.
Marvell Technology (MRVL) is scheduled to announce earnings on Thursday, and our put is well in the money. Let’s close it now to avoid earnings risk. I will recommend a put to sell after the announcement to reduce our net debit.
BAC Aug Week Four (8/26) 34 Put
Current Stock Price: $34.49
Net Debit: $8.67
Action:
- Buy to close the BAC Aug Week Four (8/26) 34 Put for around $0.25
- Sell to open the BAC Sep Week One (9/2) 34 Put for around $0.56
- Set your initial credit limit at $0.31, but adjust as needed to roll today
New Net Debit: $8.36
Expiration: After the close on Friday, Sept. 2
Potential Rate of Return: I am targeting breakeven for this position
MRVL Aug Week Four (8/26) 54 Put
Current Stock Price: $51.92
Net Debit: $17.36
Action: Buy to close the MRVL Aug Week Four (8/26) 54 Put for around $3.45, but adjust as needed to close today
New Net Debit: $20.81
Potential Rate of Return: I am targeting breakeven for this position