Bank of America (BAC) is trending in the right direction, but this has pushed our call in the money. With the bank set to report earnings next week, I am recommending we allow our shares to be called away. Once we see how the market responds to the announcement, we will sell a put to reduce our net debit on the position.
Marvell Technology (MRVL) and Pfizer (PFE) have both sold off since mid-December, and our puts are in the money. I know many of you have already been assigned shares, so we’re going to officially accept assignment and turn to a call selling strategy with the goal of capturing income and appreciation.
Note that Pfizer is scheduled to report earnings at the end of the month. I will likely recommend temporarily exiting the position before then to avoid any unnecessary risk and reopen it following the announcement.
BAC Jan Week One (1/6) 33 Call
Current Stock Price: $34.33
Cost Basis: $43.37
Action: Allow shares to be called away
Net Debit: $10.37
Potential Rate of Return: I am targeting breakeven for this position
MRVL Jan Week One (1/6) 40 Put
Current Stock Price: $35.23
Net Debit: $17.06
Action: Accept shares
Cost Basis: $57.06
Potential Rate of Return: I am targeting breakeven for this position
PFE Jan Week One (1/6) 53 Put
Current Stock Price: $50.73
Net Debit: $7.53
Action: Accept shares
Cost Basis: $60.53
Potential Rate of Return: I am targeting breakeven for this position