We have positions in Chewy (CHWY) and Micron Technology (MU) expiring today.
Our CHWY put is on track to expire worthless, resulting in a max profit.
Our MU shares are on track to be called away following one of the longest rolls in Options Income Blueprint history.
We entered the position back in mid-February when stocks were happily chugging along to new highs. We had successfully traded the semiconductor stock multiple times before, and I was looking forward to another fast winner.
But then the bottom fell out from under us and the market crashed. MU shares cratered almost 50% in a month.
We rolled the put a few times to buy ourselves time before accepting shares in mid-March at $58. The stock closed at $42.99 that day and bottomed out the following week just above $31.
Rather than cut and run, taking a gigantic loss, I encouraged members to stay the course. The stock was grossly undervalued, and we are in the midst of a consumer tech supercycle in which new-and-improved chips beget new-and-improved devices, which spark demand for even better chips, and so on and so forth.
Over the ensuing months, we sold calls and rolled them. The stock shot up and we were eventually called out of our shares, incurring a net debit. We then sold puts and rolled them, chipping away at that net debit along the way.
In August, we were once again assigned shares. We sold a call against them and have been rolling since.
Now, after almost nine months in the position, we are on track to be called away at a profit. It’s a tiny one, to be sure, but that is not my point.
My point is that we avoided a massive loss by sticking with a position because the underlying story in the stock had not changed. It was a slog, but I’m happy we can walk away today knowing we stuck with our rolling strategy and it worked.
CHWY Nov Week One (11/6) 64 Put
Current Stock Price: $68.93
Cost Basis: $0.38
Action: Watch put expire worthless
Profit: $0.38, or $38 per contract
Rate of Return: 0.6% in three days, or 72% on an annualized basis
MU Nov Week One (11/6) 50 Call
Current Stock Price: $55.10
Cost Basis: $49.63
Action: Allow shares to be called away
Profit: $0.37, or $37 per contract
Rate of Return: 0.7% in 262 days, or 1% on an annualized basis