Timing in everything, as they say, in life and in trading.
Both Chewy (CHWY) and General Motors (GM) are up big since we sold puts on them yesterday. Therefore, I am recommending we ladder the positions up, moving to higher strikes but keeping the expiration date the same. This will increase our cash in hand and potential rate of return on each.
CHWY Jan Monthly (1/15) 97.50 Put
Current Stock Price: $112.37
Cash in Hand: $0.80
Action:
- Buy to close the CHWY Jan Monthly (1/15) 97.50 Put for around $0.09
- Sell to open the CHWY Jan Monthly (1/15) 105 Put for around $0.38
- Set your initial credit limit at $0.29, but adjust as needed to roll today
New Cash in Hand: $1.09
Expiration: After the close on Friday, Jan. 15
Potential Rate of Return: 1% in four days, or 95% annualized, if this option expires worthless
GM Jan Monthly (1/15) 45.50 Put
Current Stock Price: $48.29
Cash in Hand: $0.35
Action:
- Buy to close the GM Jan Monthly (1/15) 45.50 Put for around $0.08
- Sell to open the GM Jan Monthly (1/15) 47.50 Put for around $0.46
- Set your initial credit limit at $0.38, but adjust as needed to roll today
New Cash in Hand: $0.73
Expiration: After the close on Friday, Jan. 15
Potential Rate of Return: 1.5% in four days, or 140% annualized, if this option expires worthless