I am recommending we roll our Citigroup (C) call to a lower strike to generate more income and reduce our cost basis on the position.
I am also recommending we roll our General Motors (GM) put to buy time for shares to recover while adding to our cash in hand.
C Dec Week One (12/3) 68 Call
Current Stock Price: $63.34
Cost Basis: $68.82
Action:
- Buy to close the C Dec Week One (12/3) 68 Call for around $0.03
- Sell to open the C Dec Monthly (12/17) 65 Call for around $0.98
- Set your initial credit limit at $0.95, but adjust as needed to roll today
New Cost Basis: $67.87
Expiration Date: After the close on Friday, Dec. 17
Potential Rate of Return: I am targeting breakeven for this position
GM Dec Week One (12/3) 62.50 Put
Current Stock Price: $59.88
Cash in Hand: $0.80
Action:
- Buy to close the GM Dec Week One (12/3) 62.50 Put for around $2.75
- Sell to open the GM Dec Monthly (12/17) 62.50 Put for around $3.65
- Set your initial credit limit at $0.90, but adjust as needed to roll today
New Cash in Hand: $1.70
Expiration: After the close on Friday, Dec. 17
Potential Rate of Return: 2.7% in 172 days, or 6% annualized, if this option expires worthless