The Federal Reserve has spoken. It plans to begin raising interest rates in March, which is also when it plans to wrap up its bond purchases. Stocks are rebounding today after turning sharply lower following the announcement, erasing Wednesday’s early gains.
That’s not to say the market has put in a bottom. We still have the Russia/Ukraine conflict, omicron, Apple’s (AAPL) earnings after the close, volatility in the bond market and the crypto crash to contend with. But we will continue to trade through whatever the market throws at us and take advantage of elevated volatility wherever possible.
We have four put trades expiring this week on our core stocks: Citigroup (C), General Motors (GM), Marvell Technology (MRVL) and Pfizer (PFE). I am recommending we roll them out one week to buy time and generate more income.
Prices are jumping around, and spreads are wide. Please work your limit orders to make sure the trades go off. And note that these trades are only for members already in the positions.
C Jan Week Four (1/28) 65 Put
Current Stock Price: $65.06
Net Debit: $4.74
Action:
- Buy to close the C Jan Week Four (1/28) 65 Put for around $0.62
- Sell to open the C Feb Week One (2/4) 65 Put for around $1.59
- Set your initial credit limit at $0.88, but adjust as needed to roll today
New Net Debit: $3.86
Expiration: After the close on Friday, Feb. 4
Potential Rate of Return: I am targeting breakeven for this position
GM Jan Week Four (1/28) 57.50 Put
Current Stock Price: $52.08
Cash in Hand: $1.19
Action:
- Buy to close the GM Jan Week Four (1/28) 57.50 Put for around $5.43
- Sell to open the GM Feb Week One (2/4) 57.50 Put for around $5.77
- Set your initial credit limit at $0.34, but adjust as needed to roll today
New Cash in Hand: $1.53
Expiration: After the close on Friday, Feb. 4
Potential Rate of Return: 2.7% in 18 days, or 54% annualized, if this option expires worthless
MRVL Jan Week Four (1/28) 76 Put
Current Stock Price: $67.86
Cash in Hand: $1.83
Action:
- Buy to close the MRVL Jan Week Four (1/28) 76 Put for around $8.20
- Sell to open the MRVL Feb Week One (2/4) 76 Put for around $8.45
- Set your initial credit limit at $0.25, but adjust as needed to roll today
New Cash in Hand: $2.08
Expiration: After the close on Friday, Feb. 4
Potential Rate of Return: 2.7% in 180 days, or 6% annualized, if this option expires worthless
PFE Jan Week Four (1/28) 58 Put
Current Stock Price: $54.43
Cash in Hand: $0.68
Action:
- Buy to close the PFE Jan Week Four (1/28) 58 Put for around $3.60
- Sell to open the PFE Feb Week One (2/4) 58 Put for around $3.70
- Set your initial credit limit at $0.10, but adjust as needed to roll today
New Cash in Hand: $0.78
Expiration: After the close on Friday, Feb. 4
Potential Rate of Return: 1.3% in 18 days, or 27% annualized, if this option expires worthless